Correlation Between ON Semiconductor and Navitas Semiconductor

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

Diversification Opportunities for ON Semiconductor and Navitas Semiconductor

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ON Semiconductor and Navitas is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ON Semiconductor and Navitas Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navitas Semiconductor and ON Semiconductor 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 ON Semiconductor 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 ON Semiconductor i.e., ON Semiconductor and Navitas Semiconductor go up and down completely randomly.

Pair Corralation between ON Semiconductor and Navitas Semiconductor

Allowing for the 90-day total investment horizon ON Semiconductor is expected to generate 0.61 times more return on investment than Navitas Semiconductor. However, ON Semiconductor is 1.64 times less risky than Navitas Semiconductor. It trades about -0.01 of its potential returns per unit of risk. Navitas Semiconductor Corp is currently generating about -0.19 per unit of risk. If you would invest  7,697  in ON Semiconductor on December 29, 2023 and sell it today you would lose (136.00) from holding ON Semiconductor or give up 1.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

ON Semiconductor  vs.  Navitas Semiconductor Corp

 Performance 
       Timeline  
ON Semiconductor 

Risk-Adjusted Performance

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Over the last 90 days ON Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
Navitas Semiconductor 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Navitas Semiconductor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ON Semiconductor and Navitas Semiconductor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ON Semiconductor and Navitas Semiconductor

The main advantage of trading using opposite ON Semiconductor and Navitas Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ON Semiconductor 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 ON Semiconductor 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.
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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