Correlation Between Silicon Laboratories and Arm Holdings

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

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

Diversification Opportunities for Silicon Laboratories and Arm Holdings

0.78

Correlation Coefficient

Silicon Laboratories  Arm Holdings

Poor diversification

The 3 months correlation between Silicon and Arm is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Laboratories and Arm Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arm Holdings plc and Silicon Laboratories 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 Silicon Laboratories are associated (or correlated) with Arm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arm Holdings plc has no effect on the direction of Silicon Laboratories i.e., Silicon Laboratories and Arm Holdings go up and down completely randomly.

Pair Corralation between Silicon Laboratories and Arm Holdings

Given the investment horizon of 90 days Silicon Laboratories is expected to generate 1.81 times less return on investment than Arm Holdings. But when comparing it to its historical volatility, Silicon Laboratories is 1.14 times less risky than Arm Holdings. It trades about 0.03 of its potential returns per unit of risk. Arm Holdings plc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  13,205  in Arm Holdings plc on May 18, 2025 and sell it today you would earn a total of  686.00  from holding Arm Holdings plc or generate 5.2% return on investment over 90 days.

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

Silicon Laboratories  vs.  Arm Holdings plc

Silicon Laboratories

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Silicon Laboratories are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Silicon Laboratories is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Arm Holdings plc

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Arm Holdings plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Arm Holdings may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Silicon Laboratories and Arm Holdings

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

The idea behind Silicon Laboratories and Arm Holdings plc 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.