Correlation Between ON Semiconductor and Arteris

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

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

Diversification Opportunities for ON Semiconductor and Arteris

0.94

Correlation Coefficient

ON Semiconductor  Arteris

Almost no diversification

The 3 months correlation between ON Semiconductor and Arteris is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ON Semiconductor and Arteris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arteris and ON Semiconductor 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 ON Semiconductor are associated (or correlated) with Arteris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arteris has no effect on the direction of ON Semiconductor i.e., ON Semiconductor and Arteris go up and down completely randomly.

Pair Corralation between ON Semiconductor and Arteris

Allowing for the 90-day total investment horizon ON Semiconductor is expected to generate 1.05 times more return on investment than Arteris. However, ON Semiconductor is 1.05 times more volatile than Arteris. It trades about -0.14 of its potential returns per unit of risk. Arteris is currently generating about -0.24 per unit of risk. If you would invest  5,561  in ON Semiconductor on January 18, 2025 and sell it today you would lose (2,136) from holding ON Semiconductor or give up 38.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

ON Semiconductor  vs.  Arteris

ON Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days ON Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Arteris

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arteris has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in May 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with ON Semiconductor and Arteris

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

The idea behind ON Semiconductor and Arteris 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.