Correlation Between MaxLinear and Advanced Micro

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

Diversification Opportunities for MaxLinear and Advanced Micro

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between MaxLinear and Advanced is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding MaxLinear and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices and MaxLinear 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 MaxLinear are associated (or correlated) with Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of MaxLinear i.e., MaxLinear and Advanced Micro go up and down completely randomly.

Pair Corralation between MaxLinear and Advanced Micro

Considering the 90-day investment horizon MaxLinear is expected to under-perform the Advanced Micro. In addition to that, MaxLinear is 1.17 times more volatile than Advanced Micro Devices. It trades about -0.03 of its total potential returns per unit of risk. Advanced Micro Devices is currently generating about 0.14 per unit of volatility. If you would invest  10,572  in Advanced Micro Devices on December 29, 2023 and sell it today you would earn a total of  7,477  from holding Advanced Micro Devices or generate 70.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

MaxLinear  vs.  Advanced Micro Devices

 Performance 
       Timeline  
MaxLinear 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days MaxLinear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Advanced Micro Devices 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Micro Devices are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Advanced Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.

MaxLinear and Advanced Micro Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MaxLinear and Advanced Micro

The main advantage of trading using opposite MaxLinear and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MaxLinear position performs unexpectedly, Advanced Micro 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 Advanced Micro will offset losses from the drop in Advanced Micro's long position.
The idea behind MaxLinear and Advanced Micro Devices 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.
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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