Correlation Between Ultra Clean and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and Agilent Technologies 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 Ultra Clean and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Clean Holdings and Agilent Technologies, you can compare the effects of market volatilities on Ultra Clean and Agilent Technologies 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 Ultra Clean with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Agilent Technologies.
Diversification Opportunities for Ultra Clean and Agilent Technologies
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ultra and Agilent is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Ultra Clean 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 Ultra Clean Holdings are associated (or correlated) with Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Ultra Clean i.e., Ultra Clean and Agilent Technologies go up and down completely randomly.
Pair Corralation between Ultra Clean and Agilent Technologies
Assuming the 90 days horizon Ultra Clean is expected to generate 1.79 times less return on investment than Agilent Technologies. In addition to that, Ultra Clean is 1.37 times more volatile than Agilent Technologies. It trades about 0.22 of its total potential returns per unit of risk. Agilent Technologies is currently generating about 0.55 per unit of volatility. If you would invest 12,937 in Agilent Technologies on October 25, 2024 and sell it today you would earn a total of 1,685 from holding Agilent Technologies or generate 13.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Clean Holdings vs. Agilent Technologies
Performance |
| Timeline |
| Ultra Clean Holdings |
| Agilent Technologies |
Ultra Clean and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and Agilent Technologies
The main advantage of trading using opposite Ultra Clean and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, Agilent Technologies 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 Agilent Technologies will offset losses from the drop in Agilent Technologies' long position.| Ultra Clean vs. ASML Holding NV | Ultra Clean vs. Applied Materials | Ultra Clean vs. KLA Corporation | Ultra Clean vs. Teradyne |
| Agilent Technologies vs. SCIENCE IN SPORT | Agilent Technologies vs. Air Transport Services | Agilent Technologies vs. ANTA SPORTS PRODUCT | Agilent Technologies vs. LG Display Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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