Correlation Between Valens and Wolfspeed
Can any of the company-specific risk be diversified away by investing in both Valens and Wolfspeed 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 Wolfspeed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valens and Wolfspeed, you can compare the effects of market volatilities on Valens and Wolfspeed 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 Wolfspeed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valens and Wolfspeed.
Diversification Opportunities for Valens and Wolfspeed
Excellent diversification
The 3 months correlation between Valens and Wolfspeed is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Valens and Wolfspeed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolfspeed 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 Wolfspeed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolfspeed has no effect on the direction of Valens i.e., Valens and Wolfspeed go up and down completely randomly.
Pair Corralation between Valens and Wolfspeed
Considering the 90-day investment horizon Valens is expected to under-perform the Wolfspeed. But the stock apears to be less risky and, when comparing its historical volatility, Valens is 2.55 times less risky than Wolfspeed. The stock trades about -0.18 of its potential returns per unit of risk. The Wolfspeed is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 663.00 in Wolfspeed on November 3, 2024 and sell it today you would lose (50.00) from holding Wolfspeed or give up 7.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valens vs. Wolfspeed
Performance |
| Timeline |
| Valens |
| Wolfspeed |
Valens and Wolfspeed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valens and Wolfspeed
The main advantage of trading using opposite Valens and Wolfspeed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valens position performs unexpectedly, Wolfspeed 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 Wolfspeed will offset losses from the drop in Wolfspeed's long position.| Valens vs. Wolfspeed | Valens vs. GSI Technology | Valens vs. Lattice Semiconductor | Valens vs. ON Semiconductor |
| Wolfspeed vs. NXP Semiconductors NV | Wolfspeed vs. Analog Devices | Wolfspeed vs. Microchip Technology | Wolfspeed vs. Monolithic Power Systems |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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