Correlation Between Caltagirone SpA and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Caltagirone SpA and Tower Semiconductor 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 Caltagirone SpA and Tower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caltagirone SpA and Tower Semiconductor, you can compare the effects of market volatilities on Caltagirone SpA and Tower Semiconductor 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 Caltagirone SpA with a short position of Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caltagirone SpA and Tower Semiconductor.
Diversification Opportunities for Caltagirone SpA and Tower Semiconductor
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caltagirone and Tower is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Caltagirone SpA and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor and Caltagirone SpA 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 Caltagirone SpA are associated (or correlated) with Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Caltagirone SpA i.e., Caltagirone SpA and Tower Semiconductor go up and down completely randomly.
Pair Corralation between Caltagirone SpA and Tower Semiconductor
Assuming the 90 days trading horizon Caltagirone SpA is expected to generate 3.77 times less return on investment than Tower Semiconductor. But when comparing it to its historical volatility, Caltagirone SpA is 2.19 times less risky than Tower Semiconductor. It trades about 0.1 of its potential returns per unit of risk. Tower Semiconductor is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 4,504 in Tower Semiconductor on September 25, 2024 and sell it today you would earn a total of 292.00 from holding Tower Semiconductor or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caltagirone SpA vs. Tower Semiconductor
Performance |
| Timeline |
| Caltagirone SpA |
| Tower Semiconductor |
Caltagirone SpA and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caltagirone SpA and Tower Semiconductor
The main advantage of trading using opposite Caltagirone SpA and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caltagirone SpA position performs unexpectedly, Tower Semiconductor 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 Tower Semiconductor will offset losses from the drop in Tower Semiconductor's long position.| Caltagirone SpA vs. Apple Inc | Caltagirone SpA vs. Apple Inc | Caltagirone SpA vs. Apple Inc | Caltagirone SpA vs. Apple Inc |
| Tower Semiconductor vs. AUSTEVOLL SEAFOOD | Tower Semiconductor vs. Corsair Gaming | Tower Semiconductor vs. MYFAIR GOLD P | Tower Semiconductor vs. Norwegian Air Shuttle |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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