Correlation Between FormFactor and Allegro Microsystems
Can any of the company-specific risk be diversified away by investing in both FormFactor and Allegro Microsystems 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 FormFactor and Allegro Microsystems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FormFactor and Allegro Microsystems, you can compare the effects of market volatilities on FormFactor and Allegro Microsystems 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 FormFactor with a short position of Allegro Microsystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of FormFactor and Allegro Microsystems.
Diversification Opportunities for FormFactor and Allegro Microsystems
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FormFactor and Allegro is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding FormFactor and Allegro Microsystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegro Microsystems and FormFactor 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 FormFactor are associated (or correlated) with Allegro Microsystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegro Microsystems has no effect on the direction of FormFactor i.e., FormFactor and Allegro Microsystems go up and down completely randomly.
Pair Corralation between FormFactor and Allegro Microsystems
Given the investment horizon of 90 days FormFactor is expected to generate 1.66 times more return on investment than Allegro Microsystems. However, FormFactor is 1.66 times more volatile than Allegro Microsystems. It trades about 0.16 of its potential returns per unit of risk. Allegro Microsystems is currently generating about -0.07 per unit of risk. If you would invest 3,770 in FormFactor on September 22, 2025 and sell it today you would earn a total of 1,927 from holding FormFactor or generate 51.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FormFactor vs. Allegro Microsystems
Performance |
| Timeline |
| FormFactor |
| Allegro Microsystems |
FormFactor and Allegro Microsystems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FormFactor and Allegro Microsystems
The main advantage of trading using opposite FormFactor and Allegro Microsystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FormFactor position performs unexpectedly, Allegro Microsystems 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 Allegro Microsystems will offset losses from the drop in Allegro Microsystems' long position.| FormFactor vs. Silicon Laboratories | FormFactor vs. Ambarella | FormFactor vs. IPG Photonics | FormFactor vs. Silicon Motion Technology |
| Allegro Microsystems vs. Camtek | Allegro Microsystems vs. Semtech | Allegro Microsystems vs. Impinj Inc | Allegro Microsystems vs. Silicon Laboratories |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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