Correlation Between SILICON LABORATOR and INVITATION HOMES

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

By analyzing existing cross correlation between SILICON LABORATOR and INVITATION HOMES DL, you can compare the effects of market volatilities on SILICON LABORATOR and INVITATION HOMES 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 SILICON LABORATOR with a short position of INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of SILICON LABORATOR and INVITATION HOMES.

Diversification Opportunities for SILICON LABORATOR and INVITATION HOMES

-0.59

Correlation Coefficient

SILICON LABORATOR  INVITATION HOMES

Excellent diversification

The 3 months correlation between SILICON and INVITATION is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SILICON LABORATOR and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES and SILICON LABORATOR 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 SILICON LABORATOR are associated (or correlated) with INVITATION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVITATION HOMES has no effect on the direction of SILICON LABORATOR i.e., SILICON LABORATOR and INVITATION HOMES go up and down completely randomly.

Pair Corralation between SILICON LABORATOR and INVITATION HOMES

Assuming the 90 days trading horizon SILICON LABORATOR is expected to generate 2.92 times more return on investment than INVITATION HOMES. However, SILICON LABORATOR is 2.92 times more volatile than INVITATION HOMES DL. It trades about 0.2 of its potential returns per unit of risk. INVITATION HOMES DL is currently generating about -0.1 per unit of risk. If you would invest  8,300  in SILICON LABORATOR on April 24, 2025 and sell it today you would earn a total of  3,800  from holding SILICON LABORATOR or generate 45.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SILICON LABORATOR  vs.  INVITATION HOMES DL

SILICON LABORATOR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SILICON LABORATOR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SILICON LABORATOR unveiled solid returns over the last few months and may actually be approaching a breakup point.

INVITATION HOMES

Risk-Adjusted Performance

Very Weak

Over the last 90 days INVITATION HOMES DL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SILICON LABORATOR and INVITATION HOMES

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

The idea behind SILICON LABORATOR and INVITATION HOMES DL 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.