Correlation Between Semtech and Plexus Corp
Can any of the company-specific risk be diversified away by investing in both Semtech and Plexus Corp 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 Plexus Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semtech and Plexus Corp, you can compare the effects of market volatilities on Semtech and Plexus Corp 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 Plexus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semtech and Plexus Corp.
Diversification Opportunities for Semtech and Plexus Corp
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Semtech and Plexus is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus Corp 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 Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of Semtech i.e., Semtech and Plexus Corp go up and down completely randomly.
Pair Corralation between Semtech and Plexus Corp
Given the investment horizon of 90 days Semtech is expected to generate 2.11 times more return on investment than Plexus Corp. However, Semtech is 2.11 times more volatile than Plexus Corp. It trades about 0.07 of its potential returns per unit of risk. Plexus Corp is currently generating about 0.09 per unit of risk. If you would invest 2,731 in Semtech on August 26, 2024 and sell it today you would earn a total of 2,358 from holding Semtech or generate 86.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Semtech vs. Plexus Corp
Performance |
| Timeline |
| Semtech |
| Plexus Corp |
Semtech and Plexus Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semtech and Plexus Corp
The main advantage of trading using opposite Semtech and Plexus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semtech position performs unexpectedly, Plexus Corp 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 Plexus Corp will offset losses from the drop in Plexus Corp's long position.| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
| Plexus Corp vs. Celestica | Plexus Corp vs. Benchmark Electronics | Plexus Corp vs. Flex | Plexus Corp vs. Jabil Circuit |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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