Correlation Between Silicon Motion and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Host Hotels 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 Host Hotels 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 Host Hotels Resorts, you can compare the effects of market volatilities on Silicon Motion and Host Hotels 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 Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Host Hotels.
Diversification Opportunities for Silicon Motion and Host Hotels
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Silicon and Host is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts 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 Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of Silicon Motion i.e., Silicon Motion and Host Hotels go up and down completely randomly.
Pair Corralation between Silicon Motion and Host Hotels
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 1.78 times more return on investment than Host Hotels. However, Silicon Motion is 1.78 times more volatile than Host Hotels Resorts. It trades about 0.27 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.32 per unit of risk. If you would invest 5,050 in Silicon Motion Technology on September 20, 2024 and sell it today you would earn a total of 650.00 from holding Silicon Motion Technology or generate 12.87% 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. Host Hotels Resorts
Performance |
| Timeline |
| Silicon Motion Technology |
| Host Hotels Resorts |
Silicon Motion and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Host Hotels
The main advantage of trading using opposite Silicon Motion and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| Silicon Motion vs. Wizz Air Holdings | Silicon Motion vs. NORWEGIAN AIR SHUT | Silicon Motion vs. Altair Engineering | Silicon Motion vs. Westinghouse Air Brake |
| Host Hotels vs. Silicon Motion Technology | Host Hotels vs. CARSALESCOM | Host Hotels vs. GRUPO CARSO A1 | Host Hotels vs. NISSAN CHEMICAL IND |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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