Correlation Between Nordic Semiconductor and MACOM Technology
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and MACOM Technology 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 Nordic Semiconductor and MACOM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Semiconductor ASA and MACOM Technology Solutions, you can compare the effects of market volatilities on Nordic Semiconductor and MACOM Technology 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 Nordic Semiconductor with a short position of MACOM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and MACOM Technology.
Diversification Opportunities for Nordic Semiconductor and MACOM Technology
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nordic and MACOM is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and MACOM Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACOM Technology Sol and Nordic Semiconductor 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 Nordic Semiconductor ASA are associated (or correlated) with MACOM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACOM Technology Sol has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and MACOM Technology go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and MACOM Technology
Assuming the 90 days horizon Nordic Semiconductor is expected to generate 1.55 times less return on investment than MACOM Technology. But when comparing it to its historical volatility, Nordic Semiconductor ASA is 1.15 times less risky than MACOM Technology. It trades about 0.14 of its potential returns per unit of risk. MACOM Technology Solutions is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 11,754 in MACOM Technology Solutions on August 28, 2024 and sell it today you would earn a total of 1,783 from holding MACOM Technology Solutions or generate 15.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. MACOM Technology Solutions
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| MACOM Technology Sol |
Nordic Semiconductor and MACOM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and MACOM Technology
The main advantage of trading using opposite Nordic Semiconductor and MACOM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, MACOM Technology 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 MACOM Technology will offset losses from the drop in MACOM Technology's long position.| Nordic Semiconductor vs. NVIDIA | Nordic Semiconductor vs. Intel | Nordic Semiconductor vs. Taiwan Semiconductor Manufacturing | Nordic Semiconductor vs. Marvell Technology Group |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |