Correlation Between Dell Technologies and KLA

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

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

Diversification Opportunities for Dell Technologies and KLA

0.16

Correlation Coefficient

Dell Technologies  KLA

Average diversification

The 3 months correlation between Dell and KLA is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies and KLA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Corporation and Dell Technologies 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 Dell Technologies are associated (or correlated) with KLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Corporation has no effect on the direction of Dell Technologies i.e., Dell Technologies and KLA go up and down completely randomly.

Pair Corralation between Dell Technologies and KLA

Assuming the 90 days trading horizon Dell Technologies is expected to under-perform the KLA. In addition to that, Dell Technologies is 1.71 times more volatile than KLA Corporation. It trades about -0.12 of its total potential returns per unit of risk. KLA Corporation is currently generating about 0.02 per unit of volatility. If you would invest  99,540  in KLA Corporation on December 23, 2024 and sell it today you would earn a total of  1,150  from holding KLA Corporation or generate 1.16% return on investment over 90 days.

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

Dell Technologies  vs.  KLA Corp.

Dell Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dell Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KLA Corporation

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KLA Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, KLA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dell Technologies and KLA

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

The idea behind Dell Technologies and KLA Corporation 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.