Correlation Between Onto Innovation and KLA Tencor
Can any of the company-specific risk be diversified away by investing in both Onto Innovation and KLA Tencor 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 KLA Tencor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Onto Innovation and KLA Tencor, you can compare the effects of market volatilities on Onto Innovation and KLA Tencor 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 KLA Tencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Onto Innovation and KLA Tencor.
Diversification Opportunities for Onto Innovation and KLA Tencor
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Onto and KLA is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Onto Innovation and KLA Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Tencor 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 KLA Tencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Tencor has no effect on the direction of Onto Innovation i.e., Onto Innovation and KLA Tencor go up and down completely randomly.
Pair Corralation between Onto Innovation and KLA Tencor
Given the investment horizon of 90 days Onto Innovation is expected to generate 1.46 times more return on investment than KLA Tencor. However, Onto Innovation is 1.46 times more volatile than KLA Tencor. It trades about 0.51 of its potential returns per unit of risk. KLA Tencor is currently generating about 0.56 per unit of risk. If you would invest 16,750 in Onto Innovation on October 20, 2024 and sell it today you would earn a total of 4,909 from holding Onto Innovation or generate 29.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Onto Innovation vs. KLA Tencor
Performance |
| Timeline |
| Onto Innovation |
| KLA Tencor |
Onto Innovation and KLA Tencor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Onto Innovation and KLA Tencor
The main advantage of trading using opposite Onto Innovation and KLA Tencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Onto Innovation position performs unexpectedly, KLA Tencor 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 KLA Tencor will offset losses from the drop in KLA Tencor's long position.| Onto Innovation vs. Camtek | Onto Innovation vs. Amtech Systems | Onto Innovation vs. Veeco Instruments | Onto Innovation vs. Ichor Holdings |
| KLA Tencor vs. Applied Materials | KLA Tencor vs. ASML Holding NV | KLA Tencor vs. Axcelis Technologies | KLA Tencor 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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