Correlation Between MaxLinear and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both MaxLinear and STMicroelectronics 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 MaxLinear and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MaxLinear and STMicroelectronics NV ADR, you can compare the effects of market volatilities on MaxLinear and STMicroelectronics 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 MaxLinear with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MaxLinear and STMicroelectronics.
Diversification Opportunities for MaxLinear and STMicroelectronics
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MaxLinear and STMicroelectronics is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding MaxLinear and STMicroelectronics NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics NV ADR and MaxLinear 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 MaxLinear are associated (or correlated) with STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics NV ADR has no effect on the direction of MaxLinear i.e., MaxLinear and STMicroelectronics go up and down completely randomly.
Pair Corralation between MaxLinear and STMicroelectronics
Considering the 90-day investment horizon MaxLinear is expected to generate 1.98 times more return on investment than STMicroelectronics. However, MaxLinear is 1.98 times more volatile than STMicroelectronics NV ADR. It trades about 0.19 of its potential returns per unit of risk. STMicroelectronics NV ADR is currently generating about -0.03 per unit of risk. If you would invest 1,315 in MaxLinear on September 3, 2024 and sell it today you would earn a total of 198.00 from holding MaxLinear or generate 15.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MaxLinear vs. STMicroelectronics NV ADR
Performance |
| Timeline |
| MaxLinear |
| STMicroelectronics NV ADR |
MaxLinear and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MaxLinear and STMicroelectronics
The main advantage of trading using opposite MaxLinear and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MaxLinear position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| MaxLinear vs. Silicon Motion Technology | MaxLinear vs. ASE Industrial Holding | MaxLinear vs. SemiLEDS | MaxLinear vs. Advanced Micro Devices |
| STMicroelectronics vs. NXP Semiconductors NV | STMicroelectronics vs. Analog Devices | STMicroelectronics vs. ON Semiconductor | STMicroelectronics vs. Lattice Semiconductor |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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