Correlation Between Entegris and NASD Declining

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

By analyzing existing cross correlation between Entegris and NASD Declining Stocks, you can compare the effects of market volatilities on Entegris and NASD Declining 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 NASD Declining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entegris and NASD Declining.

Diversification Opportunities for Entegris and NASD Declining

0.1

Correlation Coefficient

Entegris  NASD Declining

Average diversification

The 3 months correlation between Entegris and NASD is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Entegris and NASD Declining Stocks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NASD Declining Stocks 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 NASD Declining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NASD Declining Stocks has no effect on the direction of Entegris i.e., Entegris and NASD Declining go up and down completely randomly.

Pair Corralation between Entegris and NASD Declining

Given the investment horizon of 90 days Entegris is expected to under-perform the NASD Declining. But the stock apears to be less risky and, when comparing its historical volatility, Entegris is 19.43 times less risky than NASD Declining. The stock trades about -0.06 of its potential returns per unit of risk. The NASD Declining Stocks is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  278,300  in NASD Declining Stocks on December 29, 2024 and sell it today you would earn a total of  72,300  from holding NASD Declining Stocks or generate 25.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Entegris  vs.  NASD Declining Stocks

Pair Trading with Entegris and NASD Declining

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

The idea behind Entegris and NASD Declining Stocks 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.