Correlation Between Ultra Clean and Commercial Vehicle
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and Commercial Vehicle 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 Commercial Vehicle 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 Commercial Vehicle Group, you can compare the effects of market volatilities on Ultra Clean and Commercial Vehicle 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 Commercial Vehicle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Commercial Vehicle.
Diversification Opportunities for Ultra Clean and Commercial Vehicle
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ultra and Commercial is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Commercial Vehicle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Vehicle 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 Commercial Vehicle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Vehicle has no effect on the direction of Ultra Clean i.e., Ultra Clean and Commercial Vehicle go up and down completely randomly.
Pair Corralation between Ultra Clean and Commercial Vehicle
Assuming the 90 days horizon Ultra Clean Holdings is expected to generate 1.14 times more return on investment than Commercial Vehicle. However, Ultra Clean is 1.14 times more volatile than Commercial Vehicle Group. It trades about 0.02 of its potential returns per unit of risk. Commercial Vehicle Group is currently generating about -0.24 per unit of risk. If you would invest 3,520 in Ultra Clean Holdings on August 27, 2024 and sell it today you would lose (20.00) from holding Ultra Clean Holdings or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Clean Holdings vs. Commercial Vehicle Group
Performance |
| Timeline |
| Ultra Clean Holdings |
| Commercial Vehicle |
Ultra Clean and Commercial Vehicle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and Commercial Vehicle
The main advantage of trading using opposite Ultra Clean and Commercial Vehicle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, Commercial Vehicle 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 Commercial Vehicle will offset losses from the drop in Commercial Vehicle's long position.| Ultra Clean vs. ASML HOLDING NY | Ultra Clean vs. Applied Materials | Ultra Clean vs. Superior Plus Corp | Ultra Clean vs. NMI Holdings |
| Commercial Vehicle vs. MTI WIRELESS EDGE | Commercial Vehicle vs. SALESFORCE INC CDR | Commercial Vehicle vs. Ribbon Communications | Commercial Vehicle vs. CODERE ONLINE LUX |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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