Correlation Between MACOM Technology and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and STMicroelectronics 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 STMicroelectronics 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 STMicroelectronics NV, you can compare the effects of market volatilities on MACOM Technology and STMicroelectronics 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 STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and STMicroelectronics.
Diversification Opportunities for MACOM Technology and STMicroelectronics
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MACOM and STMicroelectronics is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics 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 STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of MACOM Technology i.e., MACOM Technology and STMicroelectronics go up and down completely randomly.
Pair Corralation between MACOM Technology and STMicroelectronics
Given the investment horizon of 90 days MACOM Technology is expected to generate 1.07 times less return on investment than STMicroelectronics. But when comparing it to its historical volatility, MACOM Technology Solutions is 2.23 times less risky than STMicroelectronics. It trades about 0.27 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,993 in STMicroelectronics NV on April 30, 2025 and sell it today you would earn a total of 637.00 from holding STMicroelectronics NV or generate 31.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
MACOM Technology Solutions vs. STMicroelectronics NV
Performance |
Timeline |
MACOM Technology Sol |
STMicroelectronics |
MACOM Technology and STMicroelectronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MACOM Technology and STMicroelectronics
The main advantage of trading using opposite MACOM Technology and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.MACOM Technology vs. Silicon Laboratories | MACOM Technology vs. Power Integrations | MACOM Technology vs. Diodes Incorporated | MACOM Technology vs. MaxLinear |
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Check out your portfolio center.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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