Correlation Between Ciena Corp and Veeco Instruments
Can any of the company-specific risk be diversified away by investing in both Ciena Corp and Veeco Instruments 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 Ciena Corp and Veeco Instruments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ciena Corp and Veeco Instruments, you can compare the effects of market volatilities on Ciena Corp and Veeco Instruments 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 Ciena Corp with a short position of Veeco Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ciena Corp and Veeco Instruments.
Diversification Opportunities for Ciena Corp and Veeco Instruments
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ciena and Veeco is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ciena Corp and Veeco Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veeco Instruments and Ciena Corp 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 Ciena Corp are associated (or correlated) with Veeco Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veeco Instruments has no effect on the direction of Ciena Corp i.e., Ciena Corp and Veeco Instruments go up and down completely randomly.
Pair Corralation between Ciena Corp and Veeco Instruments
Given the investment horizon of 90 days Ciena Corp is expected to generate 1.89 times more return on investment than Veeco Instruments. However, Ciena Corp is 1.89 times more volatile than Veeco Instruments. It trades about 0.07 of its potential returns per unit of risk. Veeco Instruments is currently generating about -0.09 per unit of risk. If you would invest 8,324 in Ciena Corp on November 3, 2024 and sell it today you would earn a total of 390.00 from holding Ciena Corp or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ciena Corp vs. Veeco Instruments
Performance |
| Timeline |
| Ciena Corp |
| Veeco Instruments |
Ciena Corp and Veeco Instruments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ciena Corp and Veeco Instruments
The main advantage of trading using opposite Ciena Corp and Veeco Instruments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ciena Corp position performs unexpectedly, Veeco Instruments 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 Veeco Instruments will offset losses from the drop in Veeco Instruments' long position.| Ciena Corp vs. Extreme Networks | Ciena Corp vs. Hewlett Packard Enterprise | Ciena Corp vs. NETGEAR | Ciena Corp vs. Motorola Solutions |
| Veeco Instruments vs. NVE Corporation | Veeco Instruments vs. Photronics | Veeco Instruments vs. Kulicke and Soffa | Veeco Instruments vs. Alvarium Tiedemann Holdings |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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