Correlation Between MACOM Technology and Safe

Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Safe 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 Safe 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 Safe and Green, you can compare the effects of market volatilities on MACOM Technology and Safe 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 Safe. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Safe.

Diversification Opportunities for MACOM Technology and Safe

-0.77

Correlation Coefficient

MACOM Technology  Safe

Pay attention - limited upside

The 3 months correlation between MACOM and Safe is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Safe and Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe and Green 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 Safe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe and Green has no effect on the direction of MACOM Technology i.e., MACOM Technology and Safe go up and down completely randomly.

Pair Corralation between MACOM Technology and Safe

Given the investment horizon of 90 days MACOM Technology is expected to generate 2.8 times less return on investment than Safe. But when comparing it to its historical volatility, MACOM Technology Solutions is 13.87 times less risky than Safe. It trades about 0.07 of its potential returns per unit of risk. Safe and Green is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  13,200  in Safe and Green on September 4, 2024 and sell it today you would lose (12,970) from holding Safe and Green or give up 98.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	61.62%
Values	Daily Returns

MACOM Technology Solutions  vs.  Safe and Green

MACOM Technology Sol

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MACOM Technology Solutions are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, MACOM Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Safe and Green

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safe and Green has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with MACOM Technology and Safe

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

The idea behind MACOM Technology Solutions and Safe and Green 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.