Correlation Between Ultra Clean and Niagara Mohawk
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and Niagara Mohawk 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 Niagara Mohawk 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 Niagara Mohawk Power, you can compare the effects of market volatilities on Ultra Clean and Niagara Mohawk 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 Niagara Mohawk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Niagara Mohawk.
Diversification Opportunities for Ultra Clean and Niagara Mohawk
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ultra and Niagara is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Niagara Mohawk Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niagara Mohawk Power 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 Niagara Mohawk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niagara Mohawk Power has no effect on the direction of Ultra Clean i.e., Ultra Clean and Niagara Mohawk go up and down completely randomly.
Pair Corralation between Ultra Clean and Niagara Mohawk
Given the investment horizon of 90 days Ultra Clean Holdings is expected to under-perform the Niagara Mohawk. In addition to that, Ultra Clean is 2.29 times more volatile than Niagara Mohawk Power. It trades about -0.01 of its total potential returns per unit of risk. Niagara Mohawk Power is currently generating about 0.05 per unit of volatility. If you would invest 5,951 in Niagara Mohawk Power on September 1, 2024 and sell it today you would earn a total of 609.00 from holding Niagara Mohawk Power or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Clean Holdings vs. Niagara Mohawk Power
Performance |
| Timeline |
| Ultra Clean Holdings |
| Niagara Mohawk Power |
Ultra Clean and Niagara Mohawk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and Niagara Mohawk
The main advantage of trading using opposite Ultra Clean and Niagara Mohawk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, Niagara Mohawk 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 Niagara Mohawk will offset losses from the drop in Niagara Mohawk's long position.| Ultra Clean vs. Amtech Systems | Ultra Clean vs. Veeco Instruments | Ultra Clean vs. Cohu Inc | Ultra Clean vs. Onto Innovation |
| Niagara Mohawk vs. Asure Software | Niagara Mohawk vs. Skechers USA | Niagara Mohawk vs. Under Armour C | Niagara Mohawk vs. Western Digital |
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.
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