Correlation Between Silicon Motion and NVIDIA
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and NVIDIA 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 NVIDIA 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 NVIDIA, you can compare the effects of market volatilities on Silicon Motion and NVIDIA 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 NVIDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and NVIDIA.
Diversification Opportunities for Silicon Motion and NVIDIA
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Silicon and NVIDIA is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA 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 NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of Silicon Motion i.e., Silicon Motion and NVIDIA go up and down completely randomly.
Pair Corralation between Silicon Motion and NVIDIA
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 0.42 times more return on investment than NVIDIA. However, Silicon Motion Technology is 2.36 times less risky than NVIDIA. It trades about -0.05 of its potential returns per unit of risk. NVIDIA is currently generating about -0.15 per unit of risk. If you would invest 5,300 in Silicon Motion Technology on November 6, 2024 and sell it today you would lose (150.00) from holding Silicon Motion Technology or give up 2.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. NVIDIA
Performance |
| Timeline |
| Silicon Motion Technology |
| NVIDIA |
Silicon Motion and NVIDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and NVIDIA
The main advantage of trading using opposite Silicon Motion and NVIDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, NVIDIA 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 NVIDIA will offset losses from the drop in NVIDIA's long position.| Silicon Motion vs. LG Electronics | Silicon Motion vs. Nucletron Electronic Aktiengesellschaft | Silicon Motion vs. Nanjing Panda Electronics | Silicon Motion vs. Arrow Electronics |
| NVIDIA vs. Lattice Semiconductor | NVIDIA vs. Nexstar Media Group | NVIDIA vs. ELMOS SEMICONDUCTOR | NVIDIA vs. PROSIEBENSAT1 MEDIADR4 |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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