Correlation Between Ultra Clean and WesBanco

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

Diversification Opportunities for Ultra Clean and WesBanco

-0.14

Correlation Coefficient

Ultra Clean  WesBanco

Good diversification

The 3 months correlation between Ultra and WesBanco is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco 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 WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Ultra Clean i.e., Ultra Clean and WesBanco go up and down completely randomly.

Pair Corralation between Ultra Clean and WesBanco

Given the investment horizon of 90 days Ultra Clean Holdings is expected to under-perform the WesBanco. In addition to that, Ultra Clean is 8.61 times more volatile than WesBanco. It trades about -0.01 of its total potential returns per unit of risk. WesBanco is currently generating about 0.0 per unit of volatility. If you would invest  2,530  in WesBanco on October 8, 2024 and sell it today you would earn a total of  0.00  from holding WesBanco or generate 0.0% 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.  WesBanco

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. In spite of comparatively stable basic indicators, Ultra Clean is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

WesBanco

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WesBanco are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, WesBanco is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ultra Clean and WesBanco

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

The idea behind Ultra Clean Holdings and WesBanco 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.