Correlation Between KLA Tencor and Avient Corp
Can any of the company-specific risk be diversified away by investing in both KLA Tencor and Avient Corp 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 KLA Tencor and Avient Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and Avient Corp, you can compare the effects of market volatilities on KLA Tencor and Avient Corp 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 KLA Tencor with a short position of Avient Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and Avient Corp.
Diversification Opportunities for KLA Tencor and Avient Corp
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KLA and Avient is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp and KLA Tencor 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 KLA Tencor are associated (or correlated) with Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of KLA Tencor i.e., KLA Tencor and Avient Corp go up and down completely randomly.
Pair Corralation between KLA Tencor and Avient Corp
Given the investment horizon of 90 days KLA Tencor is expected to generate 1.36 times more return on investment than Avient Corp. However, KLA Tencor is 1.36 times more volatile than Avient Corp. It trades about 0.13 of its potential returns per unit of risk. Avient Corp is currently generating about 0.1 per unit of risk. If you would invest 63,519 in KLA Tencor on December 3, 2024 and sell it today you would earn a total of 7,365 from holding KLA Tencor or generate 11.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
KLA Tencor vs. Avient Corp
Performance |
Timeline |
KLA Tencor |
Avient Corp |
KLA Tencor and Avient Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KLA Tencor and Avient Corp
The main advantage of trading using opposite KLA Tencor and Avient Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor position performs unexpectedly, Avient Corp 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 Avient Corp will offset losses from the drop in Avient Corp's long position.KLA Tencor vs. Applied Materials | KLA Tencor vs. ASML Holding NV | KLA Tencor vs. Axcelis Technologies | KLA Tencor vs. Teradyne |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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