Correlation Between Advanced Micro and EMCORE
Can any of the company-specific risk be diversified away by investing in both Advanced Micro and EMCORE 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 EMCORE 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 EMCORE, you can compare the effects of market volatilities on Advanced Micro and EMCORE 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 EMCORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and EMCORE.
Diversification Opportunities for Advanced Micro and EMCORE
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and EMCORE is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and EMCORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCORE 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 EMCORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCORE has no effect on the direction of Advanced Micro i.e., Advanced Micro and EMCORE go up and down completely randomly.
Pair Corralation between Advanced Micro and EMCORE
Considering the 90-day investment horizon Advanced Micro Devices is expected to generate 0.94 times more return on investment than EMCORE. However, Advanced Micro Devices is 1.06 times less risky than EMCORE. It trades about 0.05 of its potential returns per unit of risk. EMCORE is currently generating about -0.23 per unit of risk. If you would invest 17,654 in Advanced Micro Devices on December 30, 2023 and sell it today you would earn a total of 395.00 from holding Advanced Micro Devices or generate 2.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Advanced Micro Devices vs. EMCORE
Performance |
Timeline |
Advanced Micro Devices |
EMCORE |
Advanced Micro and EMCORE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Advanced Micro and EMCORE
The main advantage of trading using opposite Advanced Micro and EMCORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro position performs unexpectedly, EMCORE 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 EMCORE will offset losses from the drop in EMCORE's long position.Advanced Micro vs. Old Republic International | Advanced Micro vs. Sun Life Financial | Advanced Micro vs. Valneva SE ADR | Advanced Micro vs. Brp Group |
EMCORE vs. American Airlines Group | EMCORE vs. Apogee Enterprises | EMCORE vs. United Airlines Holdings | EMCORE vs. Olympic Steel |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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