Correlation Between Marvell Technology and Qualcomm Incorporated

Can any of the company-specific risk be diversified away by investing in both Marvell Technology and Qualcomm Incorporated 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 Marvell Technology and Qualcomm Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marvell Technology Group and Qualcomm Incorporated, you can compare the effects of market volatilities on Marvell Technology and Qualcomm Incorporated 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 Marvell Technology with a short position of Qualcomm Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marvell Technology and Qualcomm Incorporated.

Diversification Opportunities for Marvell Technology and Qualcomm Incorporated

0.41

Correlation Coefficient

Marvell Technology  Qualcomm Incorporated

Very weak diversification

The 3 months correlation between Marvell and Qualcomm is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology Group and Qualcomm Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualcomm Incorporated and Marvell Technology 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 Marvell Technology Group are associated (or correlated) with Qualcomm Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualcomm Incorporated has no effect on the direction of Marvell Technology i.e., Marvell Technology and Qualcomm Incorporated go up and down completely randomly.

Pair Corralation between Marvell Technology and Qualcomm Incorporated

Given the investment horizon of 90 days Marvell Technology is expected to generate 1.68 times less return on investment than Qualcomm Incorporated. In addition to that, Marvell Technology is 1.66 times more volatile than Qualcomm Incorporated. It trades about 0.03 of its total potential returns per unit of risk. Qualcomm Incorporated is currently generating about 0.08 per unit of volatility. If you would invest  14,172  in Qualcomm Incorporated on January 20, 2024 and sell it today you would earn a total of  1,591  from holding Qualcomm Incorporated or generate 11.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Marvell Technology Group  vs.  Qualcomm Incorporated

Marvell Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marvell Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Qualcomm Incorporated

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qualcomm Incorporated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Qualcomm Incorporated is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Marvell Technology and Qualcomm Incorporated

The main advantage of trading using opposite Marvell Technology and Qualcomm Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marvell Technology position performs unexpectedly, Qualcomm Incorporated 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 Qualcomm Incorporated will offset losses from the drop in Qualcomm Incorporated's long position.

The idea behind Marvell Technology Group and Qualcomm Incorporated 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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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.