Correlation Between Ultra Clean and Microsoft
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on Ultra Clean and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Microsoft.
Diversification Opportunities for Ultra Clean and Microsoft
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ultra and Microsoft is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Ultra Clean i.e., Ultra Clean and Microsoft go up and down completely randomly.
Pair Corralation between Ultra Clean and Microsoft
Assuming the 90 days horizon Ultra Clean Holdings is expected to under-perform the Microsoft. In addition to that, Ultra Clean is 2.17 times more volatile than Microsoft. It trades about -0.17 of its total potential returns per unit of risk. Microsoft is currently generating about 0.13 per unit of volatility. If you would invest 40,700 in Microsoft on September 27, 2024 and sell it today you would earn a total of 1,130 from holding Microsoft or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Clean Holdings vs. Microsoft
Performance |
| Timeline |
| Ultra Clean Holdings |
| Microsoft |
Ultra Clean and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and Microsoft
The main advantage of trading using opposite Ultra Clean and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| Ultra Clean vs. ASML HOLDING NY | Ultra Clean vs. ASML Holding NV | Ultra Clean vs. Applied Materials | Ultra Clean vs. Tokyo Electron Limited |
| Microsoft vs. Ultra Clean Holdings | Microsoft vs. DXC Technology Co | Microsoft vs. HK Electric Investments | Microsoft vs. WisdomTree Investments |
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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