Correlation Between Ultra Clean and CNA Financial
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and CNA Financial 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 CNA Financial 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 CNA Financial, you can compare the effects of market volatilities on Ultra Clean and CNA Financial 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 CNA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and CNA Financial.
Diversification Opportunities for Ultra Clean and CNA Financial
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ultra and CNA is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and CNA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNA Financial 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 CNA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNA Financial has no effect on the direction of Ultra Clean i.e., Ultra Clean and CNA Financial go up and down completely randomly.
Pair Corralation between Ultra Clean and CNA Financial
Given the investment horizon of 90 days Ultra Clean Holdings is expected to under-perform the CNA Financial. In addition to that, Ultra Clean is 3.77 times more volatile than CNA Financial. It trades about -0.1 of its total potential returns per unit of risk. CNA Financial is currently generating about 0.08 per unit of volatility. If you would invest 4,668 in CNA Financial on December 18, 2024 and sell it today you would earn a total of 266.00 from holding CNA Financial or generate 5.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Ultra Clean Holdings vs. CNA Financial
Performance |
Timeline |
Ultra Clean Holdings |
CNA Financial |
Ultra Clean and CNA Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ultra Clean and CNA Financial
The main advantage of trading using opposite Ultra Clean and CNA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, CNA Financial 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 CNA Financial will offset losses from the drop in CNA Financial's long position.Ultra Clean vs. Amtech Systems | Ultra Clean vs. Veeco Instruments | Ultra Clean vs. Cohu Inc | Ultra Clean vs. Onto Innovation |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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