Correlation Between SIMON and KLA Tencor

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

By analyzing existing cross correlation between SIMON PPTY GROUP and KLA Tencor, you can compare the effects of market volatilities on SIMON and KLA Tencor 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 SIMON with a short position of KLA Tencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMON and KLA Tencor.

Diversification Opportunities for SIMON and KLA Tencor

0.56

Correlation Coefficient

SIMON  KLA Tencor

Very weak diversification

The 3 months correlation between SIMON and KLA is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SIMON PPTY GROUP and KLA Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Tencor and SIMON 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 SIMON PPTY GROUP are associated (or correlated) with KLA Tencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Tencor has no effect on the direction of SIMON i.e., SIMON and KLA Tencor go up and down completely randomly.

Pair Corralation between SIMON and KLA Tencor

Assuming the 90 days trading horizon SIMON is expected to generate 33.66 times less return on investment than KLA Tencor. But when comparing it to its historical volatility, SIMON PPTY GROUP is 1.83 times less risky than KLA Tencor. It trades about 0.01 of its potential returns per unit of risk. KLA Tencor is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  61,276  in KLA Tencor on September 16, 2024 and sell it today you would earn a total of  4,100  from holding KLA Tencor or generate 6.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	66.67%
Values	Daily Returns

SIMON PPTY GROUP  vs.  KLA Tencor

SIMON PPTY GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMON PPTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SIMON PPTY GROUP investors.

KLA Tencor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KLA Tencor 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SIMON and KLA Tencor

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

The idea behind SIMON PPTY GROUP and KLA Tencor 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.