Correlation Between Semtech and Smart Global
Can any of the company-specific risk be diversified away by investing in both Semtech and Smart Global 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 Semtech and Smart Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semtech and Smart Global Holdings, you can compare the effects of market volatilities on Semtech and Smart Global 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 Semtech with a short position of Smart Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semtech and Smart Global.
Diversification Opportunities for Semtech and Smart Global
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Semtech and Smart is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and Smart Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Global Holdings and Semtech 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 Semtech are associated (or correlated) with Smart Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Global Holdings has no effect on the direction of Semtech i.e., Semtech and Smart Global go up and down completely randomly.
Pair Corralation between Semtech and Smart Global
Given the investment horizon of 90 days Semtech is expected to generate 0.96 times more return on investment than Smart Global. However, Semtech is 1.04 times less risky than Smart Global. It trades about 0.04 of its potential returns per unit of risk. Smart Global Holdings is currently generating about 0.03 per unit of risk. If you would invest 3,097 in Semtech on June 23, 2024 and sell it today you would earn a total of 1,503 from holding Semtech or generate 48.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Semtech vs. Smart Global Holdings
Performance |
Timeline |
Semtech |
Smart Global Holdings |
Semtech and Smart Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Semtech and Smart Global
The main advantage of trading using opposite Semtech and Smart Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semtech position performs unexpectedly, Smart Global 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 Smart Global will offset losses from the drop in Smart Global's long position.Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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