Correlation Between Black Hills and Ultra Clean
Can any of the company-specific risk be diversified away by investing in both Black Hills and Ultra Clean 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 Black Hills and Ultra Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Hills and Ultra Clean Holdings, you can compare the effects of market volatilities on Black Hills and Ultra Clean 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 Black Hills with a short position of Ultra Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and Ultra Clean.
Diversification Opportunities for Black Hills and Ultra Clean
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Black and Ultra is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and Ultra Clean Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Clean Holdings and Black Hills 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 Black Hills are associated (or correlated) with Ultra Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Clean Holdings has no effect on the direction of Black Hills i.e., Black Hills and Ultra Clean go up and down completely randomly.
Pair Corralation between Black Hills and Ultra Clean
Considering the 90-day investment horizon Black Hills is expected to under-perform the Ultra Clean. But the stock apears to be less risky and, when comparing its historical volatility, Black Hills is 2.66 times less risky than Ultra Clean. The stock trades about -0.02 of its potential returns per unit of risk. The Ultra Clean Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,660 in Ultra Clean Holdings on September 12, 2024 and sell it today you would earn a total of 108.00 from holding Ultra Clean Holdings or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Hills vs. Ultra Clean Holdings
Performance |
| Timeline |
| Black Hills |
| Ultra Clean Holdings |
Black Hills and Ultra Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Hills and Ultra Clean
The main advantage of trading using opposite Black Hills and Ultra Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills position performs unexpectedly, Ultra Clean 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 Ultra Clean will offset losses from the drop in Ultra Clean's long position.| Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de | Black Hills vs. Allete Inc |
| Ultra Clean vs. Teradyne | Ultra Clean vs. Onto Innovation | Ultra Clean vs. Cohu Inc | Ultra Clean vs. Entegris |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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