Correlation Between Super Micro and Fabrinet
Can any of the company-specific risk be diversified away by investing in both Super Micro and Fabrinet 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 Fabrinet 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 Fabrinet, you can compare the effects of market volatilities on Super Micro and Fabrinet 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 Fabrinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Micro and Fabrinet.
Diversification Opportunities for Super Micro and Fabrinet
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Super and Fabrinet is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet 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 Fabrinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabrinet has no effect on the direction of Super Micro i.e., Super Micro and Fabrinet go up and down completely randomly.
Pair Corralation between Super Micro and Fabrinet
Given the investment horizon of 90 days Super Micro Computer is expected to generate 3.28 times more return on investment than Fabrinet. However, Super Micro is 3.28 times more volatile than Fabrinet. It trades about 0.28 of its potential returns per unit of risk. Fabrinet is currently generating about -0.04 per unit of risk. If you would invest 2,170 in Super Micro Computer on September 13, 2024 and sell it today you would earn a total of 1,659 from holding Super Micro Computer or generate 76.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Super Micro Computer vs. Fabrinet
Performance |
| Timeline |
| Super Micro Computer |
| Fabrinet |
Super Micro and Fabrinet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Super Micro and Fabrinet
The main advantage of trading using opposite Super Micro and Fabrinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Micro position performs unexpectedly, Fabrinet 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 Fabrinet will offset losses from the drop in Fabrinet's long position.| Super Micro vs. D Wave Quantum | Super Micro vs. Rigetti Computing | Super Micro vs. Cricut Inc | Super Micro vs. Quantum Computing |
| Fabrinet vs. Quantum Computing | Fabrinet vs. IONQ Inc | Fabrinet vs. Quantum | Fabrinet vs. Super Micro Computer |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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