Correlation Between Semtech and Silicon Laboratories
Can any of the company-specific risk be diversified away by investing in both Semtech and Silicon Laboratories 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 Silicon Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semtech and Silicon Laboratories, you can compare the effects of market volatilities on Semtech and Silicon Laboratories 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 Silicon Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semtech and Silicon Laboratories.
Diversification Opportunities for Semtech and Silicon Laboratories
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Semtech and Silicon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and Silicon Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Laboratories 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 Silicon Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Laboratories has no effect on the direction of Semtech i.e., Semtech and Silicon Laboratories go up and down completely randomly.
Pair Corralation between Semtech and Silicon Laboratories
Given the investment horizon of 90 days Semtech is expected to under-perform the Silicon Laboratories. In addition to that, Semtech is 3.5 times more volatile than Silicon Laboratories. It trades about -0.3 of its total potential returns per unit of risk. Silicon Laboratories is currently generating about 0.2 per unit of volatility. If you would invest 13,475 in Silicon Laboratories on November 18, 2024 and sell it today you would earn a total of 1,479 from holding Silicon Laboratories or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Semtech vs. Silicon Laboratories
Performance |
| Timeline |
| Semtech |
| Silicon Laboratories |
Semtech and Silicon Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semtech and Silicon Laboratories
The main advantage of trading using opposite Semtech and Silicon Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semtech position performs unexpectedly, Silicon Laboratories 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 Silicon Laboratories will offset losses from the drop in Silicon Laboratories' long position.| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
| Silicon Laboratories vs. Diodes Incorporated | Silicon Laboratories vs. MACOM Technology Solutions | Silicon Laboratories vs. FormFactor | Silicon Laboratories vs. Amkor Technology |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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