Correlation Between Silicon Motion and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and CNH Industrial 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 Silicon Motion and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicon Motion Technology and CNH Industrial NV, you can compare the effects of market volatilities on Silicon Motion and CNH Industrial 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 Silicon Motion with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and CNH Industrial.
Diversification Opportunities for Silicon Motion and CNH Industrial
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Silicon and CNH is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV and Silicon Motion 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 Silicon Motion Technology are associated (or correlated) with CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of Silicon Motion i.e., Silicon Motion and CNH Industrial go up and down completely randomly.
Pair Corralation between Silicon Motion and CNH Industrial
Assuming the 90 days trading horizon Silicon Motion Technology is expected to under-perform the CNH Industrial. In addition to that, Silicon Motion is 1.15 times more volatile than CNH Industrial NV. It trades about -0.02 of its total potential returns per unit of risk. CNH Industrial NV is currently generating about 0.04 per unit of volatility. If you would invest 1,088 in CNH Industrial NV on November 4, 2024 and sell it today you would earn a total of 159.00 from holding CNH Industrial NV or generate 14.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. CNH Industrial NV
Performance |
| Timeline |
| Silicon Motion Technology |
| CNH Industrial NV |
Silicon Motion and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and CNH Industrial
The main advantage of trading using opposite Silicon Motion and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| Silicon Motion vs. BE Semiconductor Industries | Silicon Motion vs. Taiwan Semiconductor Manufacturing | Silicon Motion vs. National Retail Properties | Silicon Motion vs. Salesforce |
| CNH Industrial vs. DAIRY FARM INTL | CNH Industrial vs. Fair Isaac Corp | CNH Industrial vs. SOGECLAIR SA INH | CNH Industrial vs. Hitachi Construction Machinery |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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