Correlation Between Advanced Micro and FormFactor
Can any of the company-specific risk be diversified away by investing in both Advanced Micro and FormFactor 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 Advanced Micro and FormFactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Micro Devices and FormFactor, you can compare the effects of market volatilities on Advanced Micro and FormFactor 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 Advanced Micro with a short position of FormFactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and FormFactor.
Diversification Opportunities for Advanced Micro and FormFactor
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Advanced and FormFactor is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and FormFactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormFactor and Advanced Micro 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 Advanced Micro Devices are associated (or correlated) with FormFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormFactor has no effect on the direction of Advanced Micro i.e., Advanced Micro and FormFactor go up and down completely randomly.
Pair Corralation between Advanced Micro and FormFactor
Considering the 90-day investment horizon Advanced Micro Devices is expected to generate 1.09 times more return on investment than FormFactor. However, Advanced Micro is 1.09 times more volatile than FormFactor. It trades about 0.04 of its potential returns per unit of risk. FormFactor is currently generating about 0.02 per unit of risk. If you would invest 9,534 in Advanced Micro Devices on January 26, 2024 and sell it today you would earn a total of 5,640 from holding Advanced Micro Devices or generate 59.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Micro Devices vs. FormFactor
Performance |
| Timeline |
| Advanced Micro Devices |
| FormFactor |
Advanced Micro and FormFactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Micro and FormFactor
The main advantage of trading using opposite Advanced Micro and FormFactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro position performs unexpectedly, FormFactor 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 FormFactor will offset losses from the drop in FormFactor's long position.| Advanced Micro vs. Sunrun Inc | Advanced Micro vs. Sunnova Energy International | Advanced Micro vs. JinkoSolar Holding |
| FormFactor vs. Sunrun Inc | FormFactor vs. Sunnova Energy International | FormFactor vs. JinkoSolar Holding |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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