Correlation Between Semtech and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Semtech and Nordic Semiconductor 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 Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semtech and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Semtech and Nordic Semiconductor 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 Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semtech and Nordic Semiconductor.
Diversification Opportunities for Semtech and Nordic Semiconductor
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Semtech and Nordic is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA 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 Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of Semtech i.e., Semtech and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Semtech and Nordic Semiconductor
Given the investment horizon of 90 days Semtech is expected to generate 1.09 times more return on investment than Nordic Semiconductor. However, Semtech is 1.09 times more volatile than Nordic Semiconductor ASA. It trades about 0.13 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.04 per unit of risk. If you would invest 2,026 in Semtech on November 4, 2024 and sell it today you would earn a total of 4,670 from holding Semtech or generate 230.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Semtech vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Semtech |
| Nordic Semiconductor ASA |
Semtech and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semtech and Nordic Semiconductor
The main advantage of trading using opposite Semtech and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semtech position performs unexpectedly, Nordic Semiconductor 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 Nordic Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
| Nordic Semiconductor vs. Synaptics Incorporated | Nordic Semiconductor vs. MACOM Technology Solutions | Nordic Semiconductor vs. Silicon Laboratories | Nordic Semiconductor vs. Power Integrations |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |