Correlation Between Silicon Motion and BankUnited
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and BankUnited 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 BankUnited 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 BankUnited, you can compare the effects of market volatilities on Silicon Motion and BankUnited 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 BankUnited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and BankUnited.
Diversification Opportunities for Silicon Motion and BankUnited
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Silicon and BankUnited is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited 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 BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of Silicon Motion i.e., Silicon Motion and BankUnited go up and down completely randomly.
Pair Corralation between Silicon Motion and BankUnited
Assuming the 90 days trading horizon Silicon Motion is expected to generate 3.42 times less return on investment than BankUnited. But when comparing it to its historical volatility, Silicon Motion Technology is 1.14 times less risky than BankUnited. It trades about 0.03 of its potential returns per unit of risk. BankUnited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,256 in BankUnited on September 12, 2024 and sell it today you would earn a total of 1,684 from holding BankUnited or generate 74.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Silicon Motion Technology vs. BankUnited
Performance |
| Timeline |
| Silicon Motion Technology |
| BankUnited |
Silicon Motion and BankUnited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and BankUnited
The main advantage of trading using opposite Silicon Motion and BankUnited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, BankUnited 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 BankUnited will offset losses from the drop in BankUnited's long position.| Silicon Motion vs. Verizon Communications | Silicon Motion vs. Singapore Telecommunications Limited | Silicon Motion vs. Fair Isaac Corp | Silicon Motion vs. Internet Thailand PCL |
| BankUnited vs. Silicon Motion Technology | BankUnited vs. ALERION CLEANPOWER | BankUnited vs. Tencent Music Entertainment | BankUnited vs. KINGBOARD CHEMICAL |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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