Correlation Between Silicon Laboratories and InterDigital

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

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

Diversification Opportunities for Silicon Laboratories and InterDigital

0.81

Correlation Coefficient

Silicon Laboratories  InterDigital

Very poor diversification

The 3 months correlation between Silicon and InterDigital is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Laboratories and InterDigital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterDigital 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 InterDigital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterDigital has no effect on the direction of Silicon Laboratories i.e., Silicon Laboratories and InterDigital go up and down completely randomly.

Pair Corralation between Silicon Laboratories and InterDigital

Given the investment horizon of 90 days Silicon Laboratories is expected to under-perform the InterDigital. But the stock apears to be less risky and, when comparing its historical volatility, Silicon Laboratories is 1.04 times less risky than InterDigital. The stock trades about -0.25 of its potential returns per unit of risk. The InterDigital is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  22,101  in InterDigital on May 3, 2025 and sell it today you would earn a total of  3,719  from holding InterDigital or generate 16.83% return on investment over 90 days.

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

Silicon Laboratories  vs.  InterDigital

Silicon Laboratories

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silicon Laboratories are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Silicon Laboratories sustained solid returns over the last few months and may actually be approaching a breakup point.

InterDigital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in InterDigital are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, InterDigital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silicon Laboratories and InterDigital

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

The idea behind Silicon Laboratories and InterDigital 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.