Correlation Between MACOM Technology and IB Acquisition
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and IB Acquisition 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 IB Acquisition 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 IB Acquisition Corp, you can compare the effects of market volatilities on MACOM Technology and IB Acquisition 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 IB Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and IB Acquisition.
Diversification Opportunities for MACOM Technology and IB Acquisition
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MACOM and IBACR is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and IB Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IB Acquisition 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 IB Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IB Acquisition Corp has no effect on the direction of MACOM Technology i.e., MACOM Technology and IB Acquisition go up and down completely randomly.
Pair Corralation between MACOM Technology and IB Acquisition
Given the investment horizon of 90 days MACOM Technology is expected to generate 2.4 times less return on investment than IB Acquisition. But when comparing it to its historical volatility, MACOM Technology Solutions is 8.56 times less risky than IB Acquisition. It trades about 0.2 of its potential returns per unit of risk. IB Acquisition Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6.49 in IB Acquisition Corp on October 25, 2024 and sell it today you would lose (0.48) from holding IB Acquisition Corp or give up 7.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 77.78% |
| Values | Daily Returns |
MACOM Technology Solutions vs. IB Acquisition Corp
Performance |
| Timeline |
| MACOM Technology Sol |
| IB Acquisition Corp |
MACOM Technology and IB Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and IB Acquisition
The main advantage of trading using opposite MACOM Technology and IB Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, IB Acquisition 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 IB Acquisition will offset losses from the drop in IB Acquisition's long position.| MACOM Technology vs. Power Integrations | MACOM Technology vs. Diodes Incorporated | MACOM Technology vs. Cirrus Logic | MACOM Technology vs. Amkor Technology |
| IB Acquisition vs. Mesa Air Group | IB Acquisition vs. The Mosaic | IB Acquisition vs. NL Industries | IB Acquisition vs. International Consolidated Airlines |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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