Correlation Between Ultra Clean and Power Integrations
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and Power Integrations 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 Power Integrations 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 Power Integrations, you can compare the effects of market volatilities on Ultra Clean and Power Integrations 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 Power Integrations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Power Integrations.
Diversification Opportunities for Ultra Clean and Power Integrations
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ultra and Power is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Power Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Integrations 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 Power Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Integrations has no effect on the direction of Ultra Clean i.e., Ultra Clean and Power Integrations go up and down completely randomly.
Pair Corralation between Ultra Clean and Power Integrations
Given the investment horizon of 90 days Ultra Clean Holdings is expected to under-perform the Power Integrations. In addition to that, Ultra Clean is 1.34 times more volatile than Power Integrations. It trades about -0.03 of its total potential returns per unit of risk. Power Integrations is currently generating about -0.03 per unit of volatility. If you would invest 7,571 in Power Integrations on September 1, 2024 and sell it today you would lose (1,020) from holding Power Integrations or give up 13.47% 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. Power Integrations
Performance |
| Timeline |
| Ultra Clean Holdings |
| Power Integrations |
Ultra Clean and Power Integrations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and Power Integrations
The main advantage of trading using opposite Ultra Clean and Power Integrations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, Power Integrations 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 Power Integrations will offset losses from the drop in Power Integrations' long position.| Ultra Clean vs. Amtech Systems | Ultra Clean vs. Veeco Instruments | Ultra Clean vs. Cohu Inc | Ultra Clean vs. Onto Innovation |
| Power Integrations vs. Diodes Incorporated | Power Integrations vs. MACOM Technology Solutions | Power Integrations vs. Cirrus Logic | Power Integrations vs. Amkor Technology |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |