Correlation Between InTest and Onto Innovation

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

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

Diversification Opportunities for InTest and Onto Innovation

0.62

Correlation Coefficient

InTest  Onto Innovation

Poor diversification

The 3 months correlation between InTest and Onto is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding inTest and Onto Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onto Innovation and InTest 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 inTest 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 InTest i.e., InTest and Onto Innovation go up and down completely randomly.

Pair Corralation between InTest and Onto Innovation

Given the investment horizon of 90 days inTest is expected to under-perform the Onto Innovation. In addition to that, InTest is 1.14 times more volatile than Onto Innovation. It trades about -0.01 of its total potential returns per unit of risk. Onto Innovation is currently generating about 0.06 per unit of volatility. If you would invest  8,356  in Onto Innovation on November 20, 2024 and sell it today you would earn a total of  9,299  from holding Onto Innovation or generate 111.29% return on investment over 90 days.

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

inTest  vs.  Onto Innovation

inTest

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in inTest are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, InTest unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InTest and Onto Innovation

The main advantage of trading using opposite InTest and Onto Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InTest 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 inTest 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 Commodity Directory module to find actively traded commodities issued by global exchanges.