Correlation Between Power Integrations and MaxLinear

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

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

Diversification Opportunities for Power Integrations and MaxLinear

0.88

Correlation Coefficient

Power Integrations  MaxLinear

Very poor diversification

The 3 months correlation between Power and MaxLinear is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Power Integrations and MaxLinear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MaxLinear and Power Integrations 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 Power Integrations 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 Power Integrations i.e., Power Integrations and MaxLinear go up and down completely randomly.

Pair Corralation between Power Integrations and MaxLinear

Given the investment horizon of 90 days Power Integrations is expected to generate 0.71 times more return on investment than MaxLinear. However, Power Integrations is 1.41 times less risky than MaxLinear. It trades about 0.0 of its potential returns per unit of risk. MaxLinear is currently generating about 0.0 per unit of risk. If you would invest  5,703  in Power Integrations on March 18, 2025 and sell it today you would lose (190.00) from holding Power Integrations or give up 3.33% of portfolio value over 90 days.

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

Power Integrations  vs.  MaxLinear

Power Integrations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Integrations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Power Integrations is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

MaxLinear

Risk-Adjusted Performance

Very Weak

Over the last 90 days MaxLinear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, MaxLinear is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Power Integrations and MaxLinear

The main advantage of trading using opposite Power Integrations and MaxLinear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Integrations 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 Power Integrations 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.