Correlation Between Super Micro and CTS
Can any of the company-specific risk be diversified away by investing in both Super Micro and CTS 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 Super Micro and CTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Super Micro Computer and CTS Corporation, you can compare the effects of market volatilities on Super Micro and CTS 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 Super Micro with a short position of CTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Micro and CTS.
Diversification Opportunities for Super Micro and CTS
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Super and CTS is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and CTS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Corporation and Super Micro 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 Super Micro Computer are associated (or correlated) with CTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Corporation has no effect on the direction of Super Micro i.e., Super Micro and CTS go up and down completely randomly.
Pair Corralation between Super Micro and CTS
Given the investment horizon of 90 days Super Micro Computer is expected to generate 7.46 times more return on investment than CTS. However, Super Micro is 7.46 times more volatile than CTS Corporation. It trades about 0.3 of its potential returns per unit of risk. CTS Corporation is currently generating about 0.04 per unit of risk. If you would invest 2,033 in Super Micro Computer on September 14, 2024 and sell it today you would earn a total of 1,760 from holding Super Micro Computer or generate 86.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Super Micro Computer vs. CTS Corp.
Performance |
| Timeline |
| Super Micro Computer |
| CTS Corporation |
Super Micro and CTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Super Micro and CTS
The main advantage of trading using opposite Super Micro and CTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Micro position performs unexpectedly, CTS 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 CTS will offset losses from the drop in CTS's long position.| Super Micro vs. Rigetti Computing | Super Micro vs. D Wave Quantum | Super Micro vs. Desktop Metal | Super Micro vs. Quantum Computing |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |