Correlation Between Silicon Motion and BANNER
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and BANNER 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 BANNER 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 BANNER, you can compare the effects of market volatilities on Silicon Motion and BANNER 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 BANNER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and BANNER.
Diversification Opportunities for Silicon Motion and BANNER
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Silicon and BANNER is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and BANNER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANNER 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 BANNER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANNER has no effect on the direction of Silicon Motion i.e., Silicon Motion and BANNER go up and down completely randomly.
Pair Corralation between Silicon Motion and BANNER
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 1.95 times more return on investment than BANNER. However, Silicon Motion is 1.95 times more volatile than BANNER. It trades about -0.02 of its potential returns per unit of risk. BANNER is currently generating about -0.27 per unit of risk. If you would invest 5,350 in Silicon Motion Technology on October 11, 2024 and sell it today you would lose (100.00) from holding Silicon Motion Technology or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. BANNER
Performance |
| Timeline |
| Silicon Motion Technology |
| BANNER |
Silicon Motion and BANNER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and BANNER
The main advantage of trading using opposite Silicon Motion and BANNER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, BANNER 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 BANNER will offset losses from the drop in BANNER's long position.| Silicon Motion vs. Live Nation Entertainment | Silicon Motion vs. NorAm Drilling AS | Silicon Motion vs. GigaMedia | Silicon Motion vs. BORR DRILLING NEW |
| BANNER vs. Quaker Chemical | BANNER vs. SEKISUI CHEMICAL | BANNER vs. X FAB Silicon Foundries | BANNER vs. Silicon Motion 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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