Correlation Between KLA Tencor and Veeco Instruments
Can any of the company-specific risk be diversified away by investing in both KLA Tencor 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 KLA Tencor and Veeco Instruments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and Veeco Instruments, you can compare the effects of market volatilities on KLA Tencor 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 KLA Tencor with a short position of Veeco Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and Veeco Instruments.
Diversification Opportunities for KLA Tencor and Veeco Instruments
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between KLA and Veeco is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and Veeco Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veeco Instruments and KLA Tencor 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 KLA Tencor 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 KLA Tencor i.e., KLA Tencor and Veeco Instruments go up and down completely randomly.
Pair Corralation between KLA Tencor and Veeco Instruments
Given the investment horizon of 90 days KLA Tencor is expected to generate 1.12 times more return on investment than Veeco Instruments. However, KLA Tencor is 1.12 times more volatile than Veeco Instruments. It trades about -0.01 of its potential returns per unit of risk. Veeco Instruments is currently generating about -0.13 per unit of risk. If you would invest 75,160 in KLA Tencor on October 31, 2024 and sell it today you would lose (3,863) from holding KLA Tencor or give up 5.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KLA Tencor vs. Veeco Instruments
Performance |
| Timeline |
| KLA Tencor |
| Veeco Instruments |
KLA Tencor and Veeco Instruments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA Tencor and Veeco Instruments
The main advantage of trading using opposite KLA Tencor and Veeco Instruments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor 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.| KLA Tencor vs. Diodes Incorporated | KLA Tencor vs. Daqo New Energy | KLA Tencor vs. Micron Technology | KLA Tencor vs. MagnaChip Semiconductor |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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