Correlation Between MACOM Technology and Walt Disney

Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Walt Disney 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 MACOM Technology and Walt Disney into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MACOM Technology Solutions and The Walt Disney, you can compare the effects of market volatilities on MACOM Technology and Walt Disney 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 MACOM Technology with a short position of Walt Disney. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Walt Disney.

Diversification Opportunities for MACOM Technology and Walt Disney

0.9

Correlation Coefficient

MACOM Technology  Walt Disney

Almost no diversification

The 3 months correlation between MACOM and Walt is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and The Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and MACOM Technology 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 MACOM Technology Solutions are associated (or correlated) with Walt Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of MACOM Technology i.e., MACOM Technology and Walt Disney go up and down completely randomly.

Pair Corralation between MACOM Technology and Walt Disney

Assuming the 90 days horizon MACOM Technology is expected to generate 2.52 times less return on investment than Walt Disney. In addition to that, MACOM Technology is 1.05 times more volatile than The Walt Disney. It trades about 0.12 of its total potential returns per unit of risk. The Walt Disney is currently generating about 0.33 per unit of volatility. If you would invest  9,409  in The Walt Disney on September 13, 2024 and sell it today you would earn a total of  1,483  from holding The Walt Disney or generate 15.76% return on investment over 90 days.

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

MACOM Technology Solutions  vs.  The Walt Disney

MACOM Technology Sol

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MACOM Technology Solutions are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MACOM Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Walt Disney

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Walt Disney are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Walt Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MACOM Technology and Walt Disney

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

The idea behind MACOM Technology Solutions and The Walt Disney 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.