Correlation Between NVE and Veeco Instruments
Can any of the company-specific risk be diversified away by investing in both NVE 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 NVE and Veeco Instruments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVE Corporation and Veeco Instruments, you can compare the effects of market volatilities on NVE 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 NVE with a short position of Veeco Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVE and Veeco Instruments.
Diversification Opportunities for NVE and Veeco Instruments
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between NVE and Veeco is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding NVE Corp. and Veeco Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veeco Instruments and NVE 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 NVE Corporation 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 NVE i.e., NVE and Veeco Instruments go up and down completely randomly.
Pair Corralation between NVE and Veeco Instruments
Given the investment horizon of 90 days NVE is expected to generate 1.34 times less return on investment than Veeco Instruments. In addition to that, NVE is 1.05 times more volatile than Veeco Instruments. It trades about 0.03 of its total potential returns per unit of risk. Veeco Instruments is currently generating about 0.04 per unit of volatility. If you would invest 1,937 in Veeco Instruments on October 20, 2024 and sell it today you would earn a total of 804.00 from holding Veeco Instruments or generate 41.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVE Corp. vs. Veeco Instruments
Performance |
| Timeline |
| NVE Corporation |
| Veeco Instruments |
NVE and Veeco Instruments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVE and Veeco Instruments
The main advantage of trading using opposite NVE and Veeco Instruments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVE 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.The idea behind NVE Corporation and Veeco Instruments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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