Correlation Between SLR Investment and ON SEMICONDUCTOR

Can any of the company-specific risk be diversified away by investing in both SLR Investment and ON SEMICONDUCTOR 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 SLR Investment and ON SEMICONDUCTOR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SLR Investment Corp and ON SEMICONDUCTOR, you can compare the effects of market volatilities on SLR Investment and ON SEMICONDUCTOR 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 SLR Investment with a short position of ON SEMICONDUCTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and ON SEMICONDUCTOR.

Diversification Opportunities for SLR Investment and ON SEMICONDUCTOR

0.61

Correlation Coefficient

SLR Investment  ON SEMICONDUCTOR

Poor diversification

The 3 months correlation between SLR and XS4 is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and ON SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON SEMICONDUCTOR and SLR Investment 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 SLR Investment Corp are associated (or correlated) with ON SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON SEMICONDUCTOR has no effect on the direction of SLR Investment i.e., SLR Investment and ON SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between SLR Investment and ON SEMICONDUCTOR

Assuming the 90 days horizon SLR Investment Corp is expected to under-perform the ON SEMICONDUCTOR. But the stock apears to be less risky and, when comparing its historical volatility, SLR Investment Corp is 2.78 times less risky than ON SEMICONDUCTOR. The stock trades about -0.04 of its potential returns per unit of risk. The ON SEMICONDUCTOR is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  4,409  in ON SEMICONDUCTOR on April 16, 2025 and sell it today you would earn a total of  652.00  from holding ON SEMICONDUCTOR or generate 14.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SLR Investment Corp  vs.  ON SEMICONDUCTOR

SLR Investment Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SLR Investment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

ON SEMICONDUCTOR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ON SEMICONDUCTOR are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, ON SEMICONDUCTOR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SLR Investment and ON SEMICONDUCTOR

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

The idea behind SLR Investment Corp and ON SEMICONDUCTOR 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.