Correlation Between Silicon Laboratories and Monolithic Power

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

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

Diversification Opportunities for Silicon Laboratories and Monolithic Power

0.07

Correlation Coefficient

Silicon Laboratories  Monolithic Power

Significant diversification

The 3 months correlation between Silicon and Monolithic is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Laboratories and Monolithic Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monolithic Power Systems 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 Monolithic Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monolithic Power Systems has no effect on the direction of Silicon Laboratories i.e., Silicon Laboratories and Monolithic Power go up and down completely randomly.

Pair Corralation between Silicon Laboratories and Monolithic Power

Given the investment horizon of 90 days Silicon Laboratories is expected to generate 3.21 times less return on investment than Monolithic Power. But when comparing it to its historical volatility, Silicon Laboratories is 1.03 times less risky than Monolithic Power. It trades about 0.05 of its potential returns per unit of risk. Monolithic Power Systems is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  67,718  in Monolithic Power Systems on May 21, 2025 and sell it today you would earn a total of  17,313  from holding Monolithic Power Systems or generate 25.57% return on investment over 90 days.

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

Silicon Laboratories  vs.  Monolithic Power Systems

Silicon Laboratories

Risk-Adjusted Performance

Weak

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

Monolithic Power Systems

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Monolithic Power Systems are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Monolithic Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silicon Laboratories and Monolithic Power

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

The idea behind Silicon Laboratories and Monolithic Power Systems 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.