Correlation Between Silicon Motion and Cirrus Logic
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Cirrus Logic 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 Cirrus Logic 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 Cirrus Logic, you can compare the effects of market volatilities on Silicon Motion and Cirrus Logic 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 Cirrus Logic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Cirrus Logic.
Diversification Opportunities for Silicon Motion and Cirrus Logic
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Silicon and Cirrus is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Cirrus Logic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirrus Logic 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 Cirrus Logic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirrus Logic has no effect on the direction of Silicon Motion i.e., Silicon Motion and Cirrus Logic go up and down completely randomly.
Pair Corralation between Silicon Motion and Cirrus Logic
Given the investment horizon of 90 days Silicon Motion Technology is expected to generate 1.11 times more return on investment than Cirrus Logic. However, Silicon Motion is 1.11 times more volatile than Cirrus Logic. It trades about 0.17 of its potential returns per unit of risk. Cirrus Logic is currently generating about 0.16 per unit of risk. If you would invest 5,148 in Silicon Motion Technology on November 18, 2024 and sell it today you would earn a total of 499.00 from holding Silicon Motion Technology or generate 9.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. Cirrus Logic
Performance |
| Timeline |
| Silicon Motion Technology |
| Cirrus Logic |
Silicon Motion and Cirrus Logic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Cirrus Logic
The main advantage of trading using opposite Silicon Motion and Cirrus Logic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Cirrus Logic 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 Cirrus Logic will offset losses from the drop in Cirrus Logic's long position.| Silicon Motion vs. ASE Industrial Holding | Silicon Motion vs. United Microelectronics | Silicon Motion vs. ChipMOS Technologies | Silicon Motion vs. SemiLEDS |
| Cirrus Logic vs. Skyworks Solutions | Cirrus Logic vs. Qorvo Inc | Cirrus Logic vs. Analog Devices | Cirrus Logic vs. Lattice Semiconductor |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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