Correlation Between Power Integrations and EMCORE
Can any of the company-specific risk be diversified away by investing in both Power Integrations and EMCORE 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 Power Integrations and EMCORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Integrations and EMCORE, you can compare the effects of market volatilities on Power Integrations and EMCORE 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 Power Integrations with a short position of EMCORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Integrations and EMCORE.
Diversification Opportunities for Power Integrations and EMCORE
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Power and EMCORE is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Power Integrations and EMCORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCORE and Power Integrations 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 Power Integrations are associated (or correlated) with EMCORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCORE has no effect on the direction of Power Integrations i.e., Power Integrations and EMCORE go up and down completely randomly.
Pair Corralation between Power Integrations and EMCORE
Given the investment horizon of 90 days Power Integrations is expected to generate 2.54 times more return on investment than EMCORE. However, Power Integrations is 2.54 times more volatile than EMCORE. It trades about 0.06 of its potential returns per unit of risk. EMCORE is currently generating about 0.1 per unit of risk. If you would invest 6,122 in Power Integrations on October 20, 2024 and sell it today you would earn a total of 100.00 from holding Power Integrations or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Integrations vs. EMCORE
Performance |
| Timeline |
| Power Integrations |
| EMCORE |
Power Integrations and EMCORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Integrations and EMCORE
The main advantage of trading using opposite Power Integrations and EMCORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Integrations position performs unexpectedly, EMCORE 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 EMCORE will offset losses from the drop in EMCORE's long position.| Power Integrations vs. Diodes Incorporated | Power Integrations vs. MACOM Technology Solutions | Power Integrations vs. Cirrus Logic | Power Integrations vs. Amkor Technology |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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