Correlation Between United States and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both United States and Silicon Motion 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 United States and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Silicon Motion Technology, you can compare the effects of market volatilities on United States and Silicon Motion 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 United States with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Silicon Motion.
Diversification Opportunities for United States and Silicon Motion
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Silicon is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Silicon Motion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Motion Technology and United States 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 United States Steel are associated (or correlated) with Silicon Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Motion Technology has no effect on the direction of United States i.e., United States and Silicon Motion go up and down completely randomly.
Pair Corralation between United States and Silicon Motion
Assuming the 90 days trading horizon United States Steel is expected to generate 0.91 times more return on investment than Silicon Motion. However, United States Steel is 1.1 times less risky than Silicon Motion. It trades about 0.3 of its potential returns per unit of risk. Silicon Motion Technology is currently generating about -0.01 per unit of risk. If you would invest 3,157 in United States Steel on November 9, 2024 and sell it today you would earn a total of 461.00 from holding United States Steel or generate 14.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Silicon Motion Technology
Performance |
| Timeline |
| United States Steel |
| Silicon Motion Technology |
United States and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Silicon Motion
The main advantage of trading using opposite United States and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Silicon Motion 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 Motion will offset losses from the drop in Silicon Motion's long position.| United States vs. Nordic Semiconductor ASA | United States vs. Cleanaway Waste Management | United States vs. Tower Semiconductor | United States vs. BE Semiconductor Industries |
| Silicon Motion vs. Hanison Construction Holdings | Silicon Motion vs. FARM 51 GROUP | Silicon Motion vs. Verizon Communications | Silicon Motion vs. ALEFARM BREWING DK 05 |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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