Correlation Between Indie Semiconductor and USCF Midstream

Can any of the company-specific risk be diversified away by investing in both Indie Semiconductor and USCF Midstream 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 Indie Semiconductor and USCF Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between indie Semiconductor and USCF Midstream Energy, you can compare the effects of market volatilities on Indie Semiconductor and USCF Midstream 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 Indie Semiconductor with a short position of USCF Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indie Semiconductor and USCF Midstream.

Diversification Opportunities for Indie Semiconductor and USCF Midstream

0.73

Correlation Coefficient

Indie Semiconductor  USCF Midstream

Poor diversification

The 3 months correlation between Indie and USCF is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding indie Semiconductor and USCF Midstream Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USCF Midstream Energy and Indie Semiconductor 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 indie Semiconductor are associated (or correlated) with USCF Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USCF Midstream Energy has no effect on the direction of Indie Semiconductor i.e., Indie Semiconductor and USCF Midstream go up and down completely randomly.

Pair Corralation between Indie Semiconductor and USCF Midstream

Given the investment horizon of 90 days indie Semiconductor is expected to generate 8.95 times more return on investment than USCF Midstream. However, Indie Semiconductor is 8.95 times more volatile than USCF Midstream Energy. It trades about 0.08 of its potential returns per unit of risk. USCF Midstream Energy is currently generating about 0.2 per unit of risk. If you would invest  361.00  in indie Semiconductor on September 12, 2024 and sell it today you would earn a total of  90.00  from holding indie Semiconductor or generate 24.93% return on investment over 90 days.

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

indie Semiconductor  vs.  USCF Midstream Energy

indie Semiconductor

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in indie Semiconductor are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Indie Semiconductor demonstrated solid returns over the last few months and may actually be approaching a breakup point.

USCF Midstream Energy

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in USCF Midstream Energy are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting primary indicators, USCF Midstream demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indie Semiconductor and USCF Midstream

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

The idea behind indie Semiconductor and USCF Midstream Energy 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.