Correlation Between Ultra Clean and Loews Corp

Can any of the company-specific risk be diversified away by investing in both Ultra Clean and Loews 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 Ultra Clean and Loews Corp 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 Loews Corp, you can compare the effects of market volatilities on Ultra Clean and Loews 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 Ultra Clean with a short position of Loews Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Loews Corp.

Diversification Opportunities for Ultra Clean and Loews Corp

-0.28

Correlation Coefficient

Ultra Clean  Loews Corp

Very good diversification

The 3 months correlation between Ultra and Loews is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp 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 Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of Ultra Clean i.e., Ultra Clean and Loews Corp go up and down completely randomly.

Pair Corralation between Ultra Clean and Loews Corp

Given the investment horizon of 90 days Ultra Clean Holdings is expected to under-perform the Loews Corp. In addition to that, Ultra Clean is 4.19 times more volatile than Loews Corp. It trades about -0.1 of its total potential returns per unit of risk. Loews Corp is currently generating about 0.11 per unit of volatility. If you would invest  8,144  in Loews Corp on December 18, 2024 and sell it today you would earn a total of  598.00  from holding Loews Corp or generate 7.34% 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.  Loews Corp

Ultra Clean Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultra Clean Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Loews Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Loews Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ultra Clean and Loews Corp

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

The idea behind Ultra Clean Holdings and Loews Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.