Correlation Between Valens and Navitas Semiconductor
Can any of the company-specific risk be diversified away by investing in both Valens and Navitas 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 Valens and Navitas Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valens and Navitas Semiconductor Corp, you can compare the effects of market volatilities on Valens and Navitas 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 Valens with a short position of Navitas Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valens and Navitas Semiconductor.
Diversification Opportunities for Valens and Navitas Semiconductor
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Valens and Navitas is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Valens and Navitas Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navitas Semiconductor and Valens 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 Valens are associated (or correlated) with Navitas Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navitas Semiconductor has no effect on the direction of Valens i.e., Valens and Navitas Semiconductor go up and down completely randomly.
Pair Corralation between Valens and Navitas Semiconductor
Considering the 90-day investment horizon Valens is expected to under-perform the Navitas Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Valens is 1.66 times less risky than Navitas Semiconductor. The stock trades about -0.08 of its potential returns per unit of risk. The Navitas Semiconductor Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 278.00 in Navitas Semiconductor Corp on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Navitas Semiconductor Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valens vs. Navitas Semiconductor Corp
Performance |
| Timeline |
| Valens |
| Navitas Semiconductor |
Valens and Navitas Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valens and Navitas Semiconductor
The main advantage of trading using opposite Valens and Navitas Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valens position performs unexpectedly, Navitas 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 Navitas Semiconductor will offset losses from the drop in Navitas Semiconductor's long position.The idea behind Valens and Navitas Semiconductor Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Navitas Semiconductor vs. ON Semiconductor | Navitas Semiconductor vs. Monolithic Power Systems | Navitas Semiconductor vs. Globalfoundries | Navitas Semiconductor vs. Analog Devices |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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