Correlation Between Ultra Clean and Gap
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and Gap 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 Gap 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 The Gap, you can compare the effects of market volatilities on Ultra Clean and Gap 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 Gap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Gap.
Diversification Opportunities for Ultra Clean and Gap
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ultra and Gap is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and The Gap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap 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 Gap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap has no effect on the direction of Ultra Clean i.e., Ultra Clean and Gap go up and down completely randomly.
Pair Corralation between Ultra Clean and Gap
Assuming the 90 days horizon Ultra Clean is expected to generate 4.73 times less return on investment than Gap. But when comparing it to its historical volatility, Ultra Clean Holdings is 2.44 times less risky than Gap. It trades about 0.07 of its potential returns per unit of risk. The Gap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,010 in The Gap on September 12, 2024 and sell it today you would earn a total of 365.00 from holding The Gap or generate 18.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ultra Clean Holdings vs. The Gap
Performance |
| Timeline |
| Ultra Clean Holdings |
| Gap |
Ultra Clean and Gap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and Gap
The main advantage of trading using opposite Ultra Clean and Gap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, Gap 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 Gap will offset losses from the drop in Gap's long position.| Ultra Clean vs. Applied Materials | Ultra Clean vs. Tokyo Electron Limited | Ultra Clean vs. Superior Plus Corp | Ultra Clean vs. SIVERS SEMICONDUCTORS AB |
| Gap vs. BJs Wholesale Club | Gap vs. SPORT LISBOA E | Gap vs. National Retail Properties | Gap vs. Retail Estates NV |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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