Correlation Between Workday and Silicon Motion

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

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

Diversification Opportunities for Workday and Silicon Motion

-0.73

Correlation Coefficient

Workday  Silicon Motion

Pay attention - limited upside

The 3 months correlation between Workday and Silicon is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Workday and Silicon Motion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Motion Technology and Workday 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 Workday are associated (or correlated) with Silicon Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Motion Technology has no effect on the direction of Workday i.e., Workday and Silicon Motion go up and down completely randomly.

Pair Corralation between Workday and Silicon Motion

Given the investment horizon of 90 days Workday is expected to under-perform the Silicon Motion. In addition to that, Workday is 1.08 times more volatile than Silicon Motion Technology. It trades about -0.16 of its total potential returns per unit of risk. Silicon Motion Technology is currently generating about 0.21 per unit of volatility. If you would invest  5,785  in Silicon Motion Technology on May 14, 2025 and sell it today you would earn a total of  1,719  from holding Silicon Motion Technology or generate 29.71% return on investment over 90 days.

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

Workday  vs.  Silicon Motion Technology

Workday

Risk-Adjusted Performance

Weakest

Over the last 90 days Workday has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Silicon Motion Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Silicon Motion Technology are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Silicon Motion displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Workday and Silicon Motion

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

The idea behind Workday and Silicon Motion 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.