Correlation Between Platinum Investment and Microchip Technology
Can any of the company-specific risk be diversified away by investing in both Platinum Investment and Microchip 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 Platinum Investment and Microchip Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Platinum Investment Management and Microchip Technology Incorporated, you can compare the effects of market volatilities on Platinum Investment and Microchip 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 Platinum Investment with a short position of Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum Investment and Microchip Technology.
Diversification Opportunities for Platinum Investment and Microchip Technology
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Platinum and Microchip is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Investment Management and Microchip Technology Incorpora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology and Platinum Investment 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 Platinum Investment Management are associated (or correlated) with Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Platinum Investment i.e., Platinum Investment and Microchip Technology go up and down completely randomly.
Pair Corralation between Platinum Investment and Microchip Technology
Assuming the 90 days horizon Platinum Investment Management is expected to generate 1.12 times more return on investment than Microchip Technology. However, Platinum Investment is 1.12 times more volatile than Microchip Technology Incorporated. It trades about 0.13 of its potential returns per unit of risk. Microchip Technology Incorporated is currently generating about -0.07 per unit of risk. If you would invest 38.00 in Platinum Investment Management on October 15, 2024 and sell it today you would earn a total of 2.00 from holding Platinum Investment Management or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Platinum Investment Management vs. Microchip Technology Incorpora
Performance |
| Timeline |
| Platinum Investment |
| Microchip Technology |
Platinum Investment and Microchip Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Platinum Investment and Microchip Technology
The main advantage of trading using opposite Platinum Investment and Microchip Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum Investment position performs unexpectedly, Microchip 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 Microchip Technology will offset losses from the drop in Microchip Technology's long position.| Platinum Investment vs. Meli Hotels International | Platinum Investment vs. The Hongkong and | Platinum Investment vs. InterContinental Hotels Group | Platinum Investment vs. PPHE HOTEL GROUP |
| Microchip Technology vs. FIREWEED METALS P | Microchip Technology vs. ADRIATIC METALS LS 013355 | Microchip Technology vs. Granite Construction | Microchip Technology vs. ARDAGH METAL PACDL 0001 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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