Correlation Between Ultra Clean and METTLER TOLEDO

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

By analyzing existing cross correlation between Ultra Clean Holdings and METTLER TOLEDO INTL, you can compare the effects of market volatilities on Ultra Clean and METTLER TOLEDO 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 Ultra Clean with a short position of METTLER TOLEDO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and METTLER TOLEDO.

Diversification Opportunities for Ultra Clean and METTLER TOLEDO

0.67

Correlation Coefficient

Ultra Clean  METTLER TOLEDO

Poor diversification

The 3 months correlation between Ultra and METTLER is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and METTLER TOLEDO INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METTLER TOLEDO INTL and Ultra Clean 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 Ultra Clean Holdings are associated (or correlated) with METTLER TOLEDO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METTLER TOLEDO INTL has no effect on the direction of Ultra Clean i.e., Ultra Clean and METTLER TOLEDO go up and down completely randomly.

Pair Corralation between Ultra Clean and METTLER TOLEDO

Assuming the 90 days horizon Ultra Clean Holdings is expected to generate 1.88 times more return on investment than METTLER TOLEDO. However, Ultra Clean is 1.88 times more volatile than METTLER TOLEDO INTL. It trades about 0.03 of its potential returns per unit of risk. METTLER TOLEDO INTL is currently generating about -0.01 per unit of risk. If you would invest  2,935  in Ultra Clean Holdings on October 4, 2024 and sell it today you would earn a total of  525.00  from holding Ultra Clean Holdings or generate 17.89% return on investment over 90 days.

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

Ultra Clean Holdings  vs.  METTLER TOLEDO INTL

Ultra Clean Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultra Clean Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

METTLER TOLEDO INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METTLER TOLEDO INTL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ultra Clean and METTLER TOLEDO

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

The idea behind Ultra Clean Holdings and METTLER TOLEDO INTL 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.