Correlation Between Sitime and MACOM Technology
Can any of the company-specific risk be diversified away by investing in both Sitime and MACOM Technology 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 Sitime and MACOM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sitime and MACOM Technology Solutions, you can compare the effects of market volatilities on Sitime and MACOM Technology 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 Sitime with a short position of MACOM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitime and MACOM Technology.
Diversification Opportunities for Sitime and MACOM Technology
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sitime and MACOM is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Sitime and MACOM Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACOM Technology Sol and Sitime 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 Sitime are associated (or correlated) with MACOM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACOM Technology Sol has no effect on the direction of Sitime i.e., Sitime and MACOM Technology go up and down completely randomly.
Pair Corralation between Sitime and MACOM Technology
Given the investment horizon of 90 days Sitime is expected to generate 1.34 times more return on investment than MACOM Technology. However, Sitime is 1.34 times more volatile than MACOM Technology Solutions. It trades about 0.16 of its potential returns per unit of risk. MACOM Technology Solutions is currently generating about 0.18 per unit of risk. If you would invest 18,031 in Sitime on August 24, 2024 and sell it today you would earn a total of 3,019 from holding Sitime or generate 16.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sitime vs. MACOM Technology Solutions
Performance |
| Timeline |
| Sitime |
| MACOM Technology Sol |
Sitime and MACOM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitime and MACOM Technology
The main advantage of trading using opposite Sitime and MACOM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitime position performs unexpectedly, MACOM Technology 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 MACOM Technology will offset losses from the drop in MACOM Technology's long position.| Sitime vs. Lattice Semiconductor | Sitime vs. Qorvo Inc | Sitime vs. Microchip Technology | Sitime vs. Silicon Laboratories |
| MACOM Technology vs. Eshallgo Class A | MACOM Technology vs. Amtech Systems | MACOM Technology vs. Gold Fields Ltd | MACOM Technology vs. Aegean Airlines SA |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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