Correlation Between Gitlab and Microchip Technology

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

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

Diversification Opportunities for Gitlab and Microchip Technology

-0.35

Correlation Coefficient

Gitlab  Microchip Technology

Very good diversification

The 3 months correlation between Gitlab and Microchip is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Gitlab Inc and Microchip Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology and Gitlab 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 Gitlab Inc are associated (or correlated) with Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Gitlab i.e., Gitlab and Microchip Technology go up and down completely randomly.

Pair Corralation between Gitlab and Microchip Technology

Given the investment horizon of 90 days Gitlab Inc is expected to under-perform the Microchip Technology. In addition to that, Gitlab is 1.23 times more volatile than Microchip Technology. It trades about -0.1 of its total potential returns per unit of risk. Microchip Technology is currently generating about 0.07 per unit of volatility. If you would invest  6,074  in Microchip Technology on May 16, 2025 and sell it today you would earn a total of  521.00  from holding Microchip Technology or generate 8.58% return on investment over 90 days.

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

Gitlab Inc  vs.  Microchip Technology

Gitlab Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days Gitlab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Microchip Technology

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Microchip Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical indicators, Microchip Technology may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Gitlab and Microchip Technology

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

The idea behind Gitlab Inc and Microchip Technology 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.