Correlation Between MACOM Technology and GameStop Corp
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and GameStop Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining MACOM Technology and GameStop Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and GameStop Corp, you can compare the effects of market volatilities on MACOM Technology and GameStop Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in MACOM Technology with a short position of GameStop Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and GameStop Corp.
Diversification Opportunities for MACOM Technology and GameStop Corp
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MACOM and GameStop is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp and MACOM Technology is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on MACOM Technology Solutions are associated (or correlated) with GameStop Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameStop Corp has no effect on the direction of MACOM Technology i.e., MACOM Technology and GameStop Corp go up and down completely randomly.
Pair Corralation between MACOM Technology and GameStop Corp
Given the investment horizon of 90 days MACOM Technology is expected to generate 1.51 times less return on investment than GameStop Corp. But when comparing it to its historical volatility, MACOM Technology Solutions is 1.1 times less risky than GameStop Corp. It trades about 0.18 of its potential returns per unit of risk. GameStop Corp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,120 in GameStop Corp on September 3, 2024 and sell it today you would earn a total of 785.00 from holding GameStop Corp or generate 37.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. GameStop Corp
Performance |
| Timeline |
| MACOM Technology Sol |
| GameStop Corp |
MACOM Technology and GameStop Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and GameStop Corp
The main advantage of trading using opposite MACOM Technology and GameStop Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, GameStop Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in GameStop Corp will offset losses from the drop in GameStop Corp's long position.| MACOM Technology vs. Power Integrations | MACOM Technology vs. Diodes Incorporated | MACOM Technology vs. Cirrus Logic | MACOM Technology vs. Amkor Technology |
| GameStop Corp vs. RH | GameStop Corp vs. Dicks Sporting Goods | GameStop Corp vs. Best Buy Co | GameStop Corp vs. AutoZone |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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