Correlation Between MACOM Technology and Entegris

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

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

Diversification Opportunities for MACOM Technology and Entegris

0.63

Correlation Coefficient

MACOM Technology  Entegris

Poor diversification

The 3 months correlation between MACOM and Entegris is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Entegris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entegris and MACOM 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 MACOM Technology Solutions are associated (or correlated) with Entegris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entegris has no effect on the direction of MACOM Technology i.e., MACOM Technology and Entegris go up and down completely randomly.

Pair Corralation between MACOM Technology and Entegris

Given the investment horizon of 90 days MACOM Technology Solutions is expected to generate 0.76 times more return on investment than Entegris. However, MACOM Technology Solutions is 1.31 times less risky than Entegris. It trades about 0.06 of its potential returns per unit of risk. Entegris is currently generating about 0.02 per unit of risk. If you would invest  5,323  in MACOM Technology Solutions on January 20, 2024 and sell it today you would earn a total of  3,958  from holding MACOM Technology Solutions or generate 74.36% return on investment over 90 days.

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

MACOM Technology Solutions  vs.  Entegris

MACOM Technology Sol

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MACOM Technology Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, MACOM Technology is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Entegris

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Entegris are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Entegris may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with MACOM Technology and Entegris

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

The idea behind MACOM Technology Solutions and Entegris 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.