Correlation Between Ultra Clean and AeroVironment
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and AeroVironment 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 AeroVironment 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 AeroVironment, you can compare the effects of market volatilities on Ultra Clean and AeroVironment 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 AeroVironment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and AeroVironment.
Diversification Opportunities for Ultra Clean and AeroVironment
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ultra and AeroVironment is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and AeroVironment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AeroVironment 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 AeroVironment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AeroVironment has no effect on the direction of Ultra Clean i.e., Ultra Clean and AeroVironment go up and down completely randomly.
Pair Corralation between Ultra Clean and AeroVironment
Assuming the 90 days horizon Ultra Clean Holdings is expected to generate 0.48 times more return on investment than AeroVironment. However, Ultra Clean Holdings is 2.08 times less risky than AeroVironment. It trades about 0.15 of its potential returns per unit of risk. AeroVironment is currently generating about -0.26 per unit of risk. If you would invest 3,260 in Ultra Clean Holdings on September 14, 2024 and sell it today you would earn a total of 240.00 from holding Ultra Clean Holdings or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ultra Clean Holdings vs. AeroVironment
Performance |
| Timeline |
| Ultra Clean Holdings |
| AeroVironment |
Ultra Clean and AeroVironment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and AeroVironment
The main advantage of trading using opposite Ultra Clean and AeroVironment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, AeroVironment 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 AeroVironment will offset losses from the drop in AeroVironment'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 |
| AeroVironment vs. Ultra Clean Holdings | AeroVironment vs. Chiba Bank | AeroVironment vs. Cleanaway Waste Management | AeroVironment vs. BANKINTER ADR 2007 |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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