Correlation Between Lam Research and Ichor Holdings
Can any of the company-specific risk be diversified away by investing in both Lam Research and Ichor Holdings 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 Lam Research and Ichor Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lam Research Corp and Ichor Holdings, you can compare the effects of market volatilities on Lam Research and Ichor Holdings 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 Lam Research with a short position of Ichor Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lam Research and Ichor Holdings.
Diversification Opportunities for Lam Research and Ichor Holdings
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lam and Ichor is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lam Research Corp and Ichor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor Holdings and Lam Research 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 Lam Research Corp are associated (or correlated) with Ichor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichor Holdings has no effect on the direction of Lam Research i.e., Lam Research and Ichor Holdings go up and down completely randomly.
Pair Corralation between Lam Research and Ichor Holdings
Given the investment horizon of 90 days Lam Research Corp is expected to generate 0.81 times more return on investment than Ichor Holdings. However, Lam Research Corp is 1.23 times less risky than Ichor Holdings. It trades about -0.01 of its potential returns per unit of risk. Ichor Holdings is currently generating about -0.02 per unit of risk. If you would invest 7,949 in Lam Research Corp on October 31, 2024 and sell it today you would lose (434.00) from holding Lam Research Corp or give up 5.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lam Research Corp vs. Ichor Holdings
Performance |
| Timeline |
| Lam Research Corp |
| Ichor Holdings |
Lam Research and Ichor Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lam Research and Ichor Holdings
The main advantage of trading using opposite Lam Research and Ichor Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lam Research position performs unexpectedly, Ichor Holdings 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 Ichor Holdings will offset losses from the drop in Ichor Holdings' long position.| Lam Research vs. Diodes Incorporated | Lam Research vs. Daqo New Energy | Lam Research vs. Micron Technology | Lam Research vs. MagnaChip Semiconductor |
| Ichor Holdings vs. Diodes Incorporated | Ichor Holdings vs. Daqo New Energy | Ichor Holdings vs. Micron Technology | Ichor Holdings vs. MagnaChip Semiconductor |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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