Correlation Between Semtech and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both Semtech and Alta Equipment 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 Semtech and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semtech and Alta Equipment Group, you can compare the effects of market volatilities on Semtech and Alta Equipment 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 Semtech with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semtech and Alta Equipment.
Diversification Opportunities for Semtech and Alta Equipment
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Semtech and Alta is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and Alta Equipment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Equipment Group and Semtech 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 Semtech are associated (or correlated) with Alta Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Equipment Group has no effect on the direction of Semtech i.e., Semtech and Alta Equipment go up and down completely randomly.
Pair Corralation between Semtech and Alta Equipment
Given the investment horizon of 90 days Semtech is expected to generate 0.98 times more return on investment than Alta Equipment. However, Semtech is 1.02 times less risky than Alta Equipment. It trades about 0.12 of its potential returns per unit of risk. Alta Equipment Group is currently generating about 0.02 per unit of risk. If you would invest 3,818 in Semtech on September 1, 2024 and sell it today you would earn a total of 2,586 from holding Semtech or generate 67.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Semtech vs. Alta Equipment Group
Performance |
| Timeline |
| Semtech |
| Alta Equipment Group |
Semtech and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semtech and Alta Equipment
The main advantage of trading using opposite Semtech and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semtech position performs unexpectedly, Alta Equipment 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 Alta Equipment will offset losses from the drop in Alta Equipment's long position.| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
| Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Herc Holdings | Alta Equipment vs. PROG Holdings | Alta Equipment vs. Custom Truck One |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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