Correlation Between Ichor Holdings and EMCORE
Can any of the company-specific risk be diversified away by investing in both Ichor Holdings and EMCORE 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 Ichor Holdings and EMCORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ichor Holdings and EMCORE, you can compare the effects of market volatilities on Ichor Holdings and EMCORE 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 Ichor Holdings with a short position of EMCORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ichor Holdings and EMCORE.
Diversification Opportunities for Ichor Holdings and EMCORE
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ichor and EMCORE is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ichor Holdings and EMCORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCORE and Ichor Holdings 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 Ichor Holdings are associated (or correlated) with EMCORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCORE has no effect on the direction of Ichor Holdings i.e., Ichor Holdings and EMCORE go up and down completely randomly.
Pair Corralation between Ichor Holdings and EMCORE
Given the investment horizon of 90 days Ichor Holdings is expected to generate 3.3 times less return on investment than EMCORE. But when comparing it to its historical volatility, Ichor Holdings is 2.68 times less risky than EMCORE. It trades about 0.01 of its potential returns per unit of risk. EMCORE is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 751.00 in EMCORE on August 31, 2024 and sell it today you would lose (451.00) from holding EMCORE or give up 60.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ichor Holdings vs. EMCORE
Performance |
| Timeline |
| Ichor Holdings |
| EMCORE |
Ichor Holdings and EMCORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ichor Holdings and EMCORE
The main advantage of trading using opposite Ichor Holdings and EMCORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ichor Holdings position performs unexpectedly, EMCORE 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 EMCORE will offset losses from the drop in EMCORE's long position.| Ichor Holdings vs. Cohu Inc | Ichor Holdings vs. Entegris | Ichor Holdings vs. Kulicke and Soffa | Ichor Holdings vs. Photronics |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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