Correlation Between Cirrus Logic and Skyworks Solutions

Can any of the company-specific risk be diversified away by investing in both Cirrus Logic and Skyworks Solutions 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 Cirrus Logic and Skyworks Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Cirrus Logic and Skyworks Solutions

0.96

Correlation Coefficient

Cirrus Logic  Skyworks Solutions

Almost no diversification

The 3 months correlation between Cirrus and Skyworks is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Cirrus Logic and Skyworks Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skyworks Solutions and Cirrus Logic 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 Cirrus Logic are associated (or correlated) with Skyworks Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skyworks Solutions has no effect on the direction of Cirrus Logic i.e., Cirrus Logic and Skyworks Solutions go up and down completely randomly.

Pair Corralation between Cirrus Logic and Skyworks Solutions

Given the investment horizon of 90 days Cirrus Logic is expected to under-perform the Skyworks Solutions. In addition to that, Cirrus Logic is 1.37 times more volatile than Skyworks Solutions. It trades about -0.14 of its total potential returns per unit of risk. Skyworks Solutions is currently generating about -0.09 per unit of volatility. If you would invest  8,999  in Skyworks Solutions on August 31, 2024 and sell it today you would lose (319.00) from holding Skyworks Solutions or give up 3.54% of portfolio value over 90 days.

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

Cirrus Logic  vs.  Skyworks Solutions

Cirrus Logic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cirrus Logic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Skyworks Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skyworks Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cirrus Logic and Skyworks Solutions

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

The idea behind Cirrus Logic and Skyworks Solutions 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.