Correlation Between Entegris and Onto Innovation

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

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

Diversification Opportunities for Entegris and Onto Innovation

-0.04

Correlation Coefficient

Entegris  Onto Innovation

Good diversification

The 3 months correlation between Entegris and Onto is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Entegris and Onto Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onto Innovation and Entegris 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 Entegris are associated (or correlated) with Onto Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onto Innovation has no effect on the direction of Entegris i.e., Entegris and Onto Innovation go up and down completely randomly.

Pair Corralation between Entegris and Onto Innovation

Given the investment horizon of 90 days Entegris is expected to generate 1.29 times less return on investment than Onto Innovation. But when comparing it to its historical volatility, Entegris is 1.5 times less risky than Onto Innovation. It trades about 0.06 of its potential returns per unit of risk. Onto Innovation is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  16,284  in Onto Innovation on November 19, 2024 and sell it today you would earn a total of  1,371  from holding Onto Innovation or generate 8.42% return on investment over 90 days.

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

Entegris  vs.  Onto Innovation

Entegris

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Entegris are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Entegris may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Onto Innovation

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Onto Innovation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Onto Innovation may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Entegris and Onto Innovation

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

The idea behind Entegris and Onto Innovation 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.