Correlation Between Silicon Laboratories and MaxLinear

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

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

Diversification Opportunities for Silicon Laboratories and MaxLinear

-0.02

Correlation Coefficient

Silicon Laboratories  MaxLinear

Good diversification

The 3 months correlation between Silicon and MaxLinear is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Laboratories and MaxLinear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MaxLinear and Silicon Laboratories 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 Silicon Laboratories are associated (or correlated) with MaxLinear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MaxLinear has no effect on the direction of Silicon Laboratories i.e., Silicon Laboratories and MaxLinear go up and down completely randomly.

Pair Corralation between Silicon Laboratories and MaxLinear

Given the investment horizon of 90 days Silicon Laboratories is expected to generate 2.5 times less return on investment than MaxLinear. But when comparing it to its historical volatility, Silicon Laboratories is 1.5 times less risky than MaxLinear. It trades about 0.03 of its potential returns per unit of risk. MaxLinear is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,369  in MaxLinear on August 31, 2024 and sell it today you would earn a total of  86.00  from holding MaxLinear or generate 6.28% return on investment over 90 days.

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

Silicon Laboratories  vs.  MaxLinear

Silicon Laboratories

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Silicon Laboratories are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Silicon Laboratories is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

MaxLinear

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MaxLinear are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, MaxLinear may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Silicon Laboratories and MaxLinear

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

The idea behind Silicon Laboratories and MaxLinear 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 Anywhere module to track or share privately all of your investments from the convenience of any device.