Correlation Between Ultra Clean and NI Holdings
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and NI Holdings 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 NI Holdings 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 NI Holdings, you can compare the effects of market volatilities on Ultra Clean and NI Holdings 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 NI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and NI Holdings.
Diversification Opportunities for Ultra Clean and NI Holdings
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ultra and NODK is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and NI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NI Holdings 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 NI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NI Holdings has no effect on the direction of Ultra Clean i.e., Ultra Clean and NI Holdings go up and down completely randomly.
Pair Corralation between Ultra Clean and NI Holdings
Given the investment horizon of 90 days Ultra Clean Holdings is expected to under-perform the NI Holdings. In addition to that, Ultra Clean is 3.09 times more volatile than NI Holdings. It trades about -0.1 of its total potential returns per unit of risk. NI Holdings is currently generating about -0.13 per unit of volatility. If you would invest 1,578 in NI Holdings on December 18, 2024 and sell it today you would lose (186.00) from holding NI Holdings or give up 11.79% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ultra Clean Holdings vs. NI Holdings
Performance |
Timeline |
Ultra Clean Holdings |
NI Holdings |
Ultra Clean and NI Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ultra Clean and NI Holdings
The main advantage of trading using opposite Ultra Clean and NI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, NI Holdings 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 NI Holdings will offset losses from the drop in NI Holdings' 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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