Correlation Between Onto Innovation and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Onto Innovation and Applied Materials 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 Onto Innovation and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Onto Innovation and Applied Materials, you can compare the effects of market volatilities on Onto Innovation and Applied Materials 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 Onto Innovation with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Onto Innovation and Applied Materials.
Diversification Opportunities for Onto Innovation and Applied Materials
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Onto and Applied is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Onto Innovation and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Onto Innovation 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 Onto Innovation are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Onto Innovation i.e., Onto Innovation and Applied Materials go up and down completely randomly.
Pair Corralation between Onto Innovation and Applied Materials
Given the investment horizon of 90 days Onto Innovation is expected to under-perform the Applied Materials. In addition to that, Onto Innovation is 1.28 times more volatile than Applied Materials. It trades about -0.25 of its total potential returns per unit of risk. Applied Materials is currently generating about -0.09 per unit of volatility. If you would invest 18,491 in Applied Materials on August 28, 2024 and sell it today you would lose (1,036) from holding Applied Materials or give up 5.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Onto Innovation vs. Applied Materials
Performance |
| Timeline |
| Onto Innovation |
| Applied Materials |
Onto Innovation and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Onto Innovation and Applied Materials
The main advantage of trading using opposite Onto Innovation and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Onto Innovation position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| Onto Innovation vs. Camtek | Onto Innovation vs. Amtech Systems | Onto Innovation vs. Veeco Instruments | Onto Innovation vs. Ichor Holdings |
| Applied Materials vs. KLA Tencor | Applied Materials vs. ASML Holding NV | Applied Materials vs. Axcelis Technologies | Applied Materials vs. Teradyne |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |