Correlation Between EMCORE and MaxLinear

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

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

Diversification Opportunities for EMCORE and MaxLinear

-0.01

Correlation Coefficient

EMCORE  MaxLinear

Good diversification

The 3 months correlation between EMCORE and MaxLinear is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding EMCORE and MaxLinear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MaxLinear and EMCORE 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 EMCORE 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 EMCORE i.e., EMCORE and MaxLinear go up and down completely randomly.

Pair Corralation between EMCORE and MaxLinear

Given the investment horizon of 90 days EMCORE is expected to under-perform the MaxLinear. In addition to that, EMCORE is 2.01 times more volatile than MaxLinear. It trades about -0.13 of its total potential returns per unit of risk. MaxLinear is currently generating about -0.06 per unit of volatility. If you would invest  2,342  in MaxLinear on January 24, 2024 and sell it today you would lose (360.00) from holding MaxLinear or give up 15.37% of portfolio value over 90 days.

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

EMCORE  vs.  MaxLinear

EMCORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMCORE has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

MaxLinear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MaxLinear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with EMCORE and MaxLinear

The main advantage of trading using opposite EMCORE and MaxLinear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCORE 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 EMCORE 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.