Correlation Between Monolithic Power and Northern International
Can any of the company-specific risk be diversified away by investing in both Monolithic Power and Northern International 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 Monolithic Power and Northern International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monolithic Power Systems and Northern International Equity, you can compare the effects of market volatilities on Monolithic Power and Northern International 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 Monolithic Power with a short position of Northern International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monolithic Power and Northern International.
Diversification Opportunities for Monolithic Power and Northern International
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monolithic and Northern is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Monolithic Power Systems and Northern International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern International and Monolithic Power 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 Monolithic Power Systems are associated (or correlated) with Northern International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern International has no effect on the direction of Monolithic Power i.e., Monolithic Power and Northern International go up and down completely randomly.
Pair Corralation between Monolithic Power and Northern International
Given the investment horizon of 90 days Monolithic Power Systems is expected to generate 4.27 times more return on investment than Northern International. However, Monolithic Power is 4.27 times more volatile than Northern International Equity. It trades about 0.08 of its potential returns per unit of risk. Northern International Equity is currently generating about 0.11 per unit of risk. If you would invest 82,220 in Monolithic Power Systems on September 2, 2025 and sell it today you would earn a total of 10,597 from holding Monolithic Power Systems or generate 12.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monolithic Power Systems vs. Northern International Equity
Performance |
| Timeline |
| Monolithic Power Systems |
| Northern International |
Monolithic Power and Northern International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monolithic Power and Northern International
The main advantage of trading using opposite Monolithic Power and Northern International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monolithic Power position performs unexpectedly, Northern International 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 Northern International will offset losses from the drop in Northern International's long position.| Monolithic Power vs. Fevertree Drinks Plc | Monolithic Power vs. BG Foods | Monolithic Power vs. Integrated Drilling Equipment | Monolithic Power vs. Pembina Pipeline |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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