Correlation Between Globalfoundries and Onto Innovation

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

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

Diversification Opportunities for Globalfoundries and Onto Innovation

-0.63

Correlation Coefficient

Globalfoundries  Onto Innovation

Excellent diversification

The 3 months correlation between Globalfoundries and Onto is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and Onto Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onto Innovation and Globalfoundries 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 Globalfoundries 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 Globalfoundries i.e., Globalfoundries and Onto Innovation go up and down completely randomly.

Pair Corralation between Globalfoundries and Onto Innovation

Considering the 90-day investment horizon Globalfoundries is expected to under-perform the Onto Innovation. In addition to that, Globalfoundries is 1.09 times more volatile than Onto Innovation. It trades about -0.05 of its total potential returns per unit of risk. Onto Innovation is currently generating about 0.02 per unit of volatility. If you would invest  16,629  in Onto Innovation on September 23, 2024 and sell it today you would earn a total of  96.00  from holding Onto Innovation or generate 0.58% return on investment over 90 days.

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

Globalfoundries  vs.  Onto Innovation

Globalfoundries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Globalfoundries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Onto Innovation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Onto Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Globalfoundries and Onto Innovation

The main advantage of trading using opposite Globalfoundries and Onto Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries 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 Globalfoundries 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.