Correlation Between Lam Research and Rubicon Technology

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

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

Diversification Opportunities for Lam Research and Rubicon Technology

0.0

Correlation Coefficient

Lam Research  Rubicon Technology

Pay attention - limited upside

The 3 months correlation between Lam and Rubicon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lam Research Corp and Rubicon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Technology and Lam Research 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 Lam Research Corp are associated (or correlated) with Rubicon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Technology has no effect on the direction of Lam Research i.e., Lam Research and Rubicon Technology go up and down completely randomly.

Pair Corralation between Lam Research and Rubicon Technology

If you would invest  4,753  in Lam Research Corp on November 19, 2024 and sell it today you would earn a total of  3,522  from holding Lam Research Corp or generate 74.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Lam Research Corp  vs.  Rubicon Technology

Lam Research Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lam Research Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental indicators, Lam Research showed solid returns over the last few months and may actually be approaching a breakup point.

Rubicon Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rubicon Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Rubicon Technology is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lam Research and Rubicon Technology

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

The idea behind Lam Research Corp and Rubicon Technology 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.