Correlation Between Employers Holdings and Skyworks Solutions

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

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

Diversification Opportunities for Employers Holdings and Skyworks Solutions

-0.71

Correlation Coefficient

Employers Holdings  Skyworks Solutions

Pay attention - limited upside

The 3 months correlation between Employers and Skyworks is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and Skyworks Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skyworks Solutions and Employers Holdings 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 Employers Holdings 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 Employers Holdings i.e., Employers Holdings and Skyworks Solutions go up and down completely randomly.

Pair Corralation between Employers Holdings and Skyworks Solutions

Considering the 90-day investment horizon Employers Holdings is expected to generate 0.65 times more return on investment than Skyworks Solutions. However, Employers Holdings is 1.53 times less risky than Skyworks Solutions. It trades about 0.04 of its potential returns per unit of risk. Skyworks Solutions is currently generating about 0.01 per unit of risk. If you would invest  4,127  in Employers Holdings on August 19, 2024 and sell it today you would earn a total of  1,161  from holding Employers Holdings or generate 28.13% return on investment over 90 days.

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

Employers Holdings  vs.  Skyworks Solutions

Employers Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Employers Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Employers Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

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 Employers Holdings and Skyworks Solutions

The main advantage of trading using opposite Employers Holdings and Skyworks Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings 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 Employers Holdings 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.