Correlation Between Wolfspeed and CEVA

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Can any of the company-specific risk be diversified away by investing in both Wolfspeed and CEVA 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 Wolfspeed and CEVA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wolfspeed and CEVA Inc, you can compare the effects of market volatilities on Wolfspeed and CEVA 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 Wolfspeed with a short position of CEVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wolfspeed and CEVA.

Diversification Opportunities for Wolfspeed and CEVA

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Wolfspeed and CEVA is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Wolfspeed and CEVA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEVA Inc and Wolfspeed 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 Wolfspeed are associated (or correlated) with CEVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEVA Inc has no effect on the direction of Wolfspeed i.e., Wolfspeed and CEVA go up and down completely randomly.

Pair Corralation between Wolfspeed and CEVA

Given the investment horizon of 90 days Wolfspeed is expected to under-perform the CEVA. In addition to that, Wolfspeed is 1.95 times more volatile than CEVA Inc. It trades about -0.04 of its total potential returns per unit of risk. CEVA Inc is currently generating about 0.03 per unit of volatility. If you would invest  2,472  in CEVA Inc on August 31, 2024 and sell it today you would earn a total of  502.00  from holding CEVA Inc or generate 20.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Wolfspeed  vs.  CEVA Inc

 Performance 
       Timeline  
Wolfspeed 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Wolfspeed are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, Wolfspeed reported solid returns over the last few months and may actually be approaching a breakup point.
CEVA Inc 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in CEVA Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CEVA sustained solid returns over the last few months and may actually be approaching a breakup point.

Wolfspeed and CEVA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wolfspeed and CEVA

The main advantage of trading using opposite Wolfspeed and CEVA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wolfspeed position performs unexpectedly, CEVA 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 CEVA will offset losses from the drop in CEVA's long position.
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The idea behind Wolfspeed and CEVA Inc 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.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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