Correlation Between MACOM Technology and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Minerals Technologies 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 Minerals Technologies 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 Minerals Technologies, you can compare the effects of market volatilities on MACOM Technology and Minerals Technologies 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 Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Minerals Technologies.
Diversification Opportunities for MACOM Technology and Minerals Technologies
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MACOM and Minerals is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of MACOM Technology i.e., MACOM Technology and Minerals Technologies go up and down completely randomly.
Pair Corralation between MACOM Technology and Minerals Technologies
Given the investment horizon of 90 days MACOM Technology Solutions is expected to generate 1.72 times more return on investment than Minerals Technologies. However, MACOM Technology is 1.72 times more volatile than Minerals Technologies. It trades about 0.14 of its potential returns per unit of risk. Minerals Technologies is currently generating about 0.11 per unit of risk. If you would invest 10,548 in MACOM Technology Solutions on August 28, 2024 and sell it today you would earn a total of 2,989 from holding MACOM Technology Solutions or generate 28.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Minerals Technologies
Performance |
| Timeline |
| MACOM Technology Sol |
| Minerals Technologies |
MACOM Technology and Minerals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Minerals Technologies
The main advantage of trading using opposite MACOM Technology and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Minerals Technologies 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 Minerals Technologies will offset losses from the drop in Minerals Technologies' long position.| MACOM Technology vs. Power Integrations | MACOM Technology vs. Diodes Incorporated | MACOM Technology vs. Cirrus Logic | MACOM Technology vs. Amkor Technology |
| Minerals Technologies vs. Oil Dri | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Northern Technologies | Minerals Technologies vs. Cabot |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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