Correlation Between Ultra Clean and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Ultra Clean 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 Ultra Clean and Applied Materials 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 Applied Materials, you can compare the effects of market volatilities on Ultra Clean 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 Ultra Clean with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Applied Materials.
Diversification Opportunities for Ultra Clean and Applied Materials
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ultra and Applied is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials 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 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 Ultra Clean i.e., Ultra Clean and Applied Materials go up and down completely randomly.
Pair Corralation between Ultra Clean and Applied Materials
Assuming the 90 days horizon Ultra Clean Holdings is expected to generate 0.84 times more return on investment than Applied Materials. However, Ultra Clean Holdings is 1.2 times less risky than Applied Materials. It trades about 0.07 of its potential returns per unit of risk. Applied Materials is currently generating about -0.12 per unit of risk. If you would invest 3,400 in Ultra Clean Holdings on September 13, 2024 and sell it today you would earn a total of 120.00 from holding Ultra Clean Holdings or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Clean Holdings vs. Applied Materials
Performance |
| Timeline |
| Ultra Clean Holdings |
| Applied Materials |
Ultra Clean and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and Applied Materials
The main advantage of trading using opposite Ultra Clean and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean 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.| Ultra Clean vs. Cardinal Health | Ultra Clean vs. Fevertree Drinks PLC | Ultra Clean vs. DiamondRock Hospitality | Ultra Clean vs. Tsingtao Brewery |
| Applied Materials vs. Tokyo Electron Limited | Applied Materials vs. Superior Plus Corp | Applied Materials vs. SIVERS SEMICONDUCTORS AB | Applied Materials vs. Norsk Hydro ASA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |