Correlation Between SmartSet Automation and Microchip Technology

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

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

Diversification Opportunities for SmartSet Automation and Microchip Technology

0.07

Correlation Coefficient

SmartSet Automation  Microchip Technology

Significant diversification

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

Pair Corralation between SmartSet Automation and Microchip Technology

Given the investment horizon of 90 days SmartSet Automation LLC is expected to generate 6.36 times more return on investment than Microchip Technology. However, SmartSet Automation is 6.36 times more volatile than Microchip Technology. It trades about 0.02 of its potential returns per unit of risk. Microchip Technology is currently generating about 0.13 per unit of risk. If you would invest  0.26  in SmartSet Automation LLC on May 9, 2025 and sell it today you would lose (0.11) from holding SmartSet Automation LLC or give up 42.31% of portfolio value over 90 days.

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

SmartSet Automation LLC  vs.  Microchip Technology

SmartSet Automation LLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SmartSet Automation LLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, SmartSet Automation exhibited solid returns over the last few months and may actually be approaching a breakup point.

Microchip Technology

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Microchip Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical indicators, Microchip Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SmartSet Automation and Microchip Technology

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

The idea behind SmartSet Automation LLC and Microchip Technology 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..