Correlation Between Silicon Motion and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and CDN IMPERIAL 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 CDN IMPERIAL 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 CDN IMPERIAL BANK, you can compare the effects of market volatilities on Silicon Motion and CDN IMPERIAL 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 CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and CDN IMPERIAL.
Diversification Opportunities for Silicon Motion and CDN IMPERIAL
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Silicon and CDN is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of Silicon Motion i.e., Silicon Motion and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between Silicon Motion and CDN IMPERIAL
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 1.64 times more return on investment than CDN IMPERIAL. However, Silicon Motion is 1.64 times more volatile than CDN IMPERIAL BANK. It trades about -0.08 of its potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about -0.26 per unit of risk. If you would invest 5,400 in Silicon Motion Technology on December 24, 2024 and sell it today you would lose (300.00) from holding Silicon Motion Technology or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Silicon Motion Technology vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| Silicon Motion Technology |
| CDN IMPERIAL BANK |
Silicon Motion and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and CDN IMPERIAL
The main advantage of trading using opposite Silicon Motion and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.| Silicon Motion vs. CN MODERN DAIRY | Silicon Motion vs. Vulcan Materials | Silicon Motion vs. LIFEWAY FOODS | Silicon Motion vs. Axfood AB |
| CDN IMPERIAL vs. BRAEMAR HOTELS RES | CDN IMPERIAL vs. Meli Hotels International | CDN IMPERIAL vs. MIRAMAR HOTEL INV | CDN IMPERIAL vs. Sotherly Hotels |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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