Correlation Between Ultra Clean and Stepstone
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and Stepstone 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 Stepstone 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 Stepstone Group, you can compare the effects of market volatilities on Ultra Clean and Stepstone 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 Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Stepstone.
Diversification Opportunities for Ultra Clean and Stepstone
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ultra and Stepstone is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group 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 Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of Ultra Clean i.e., Ultra Clean and Stepstone go up and down completely randomly.
Pair Corralation between Ultra Clean and Stepstone
Given the investment horizon of 90 days Ultra Clean Holdings is expected to under-perform the Stepstone. In addition to that, Ultra Clean is 1.54 times more volatile than Stepstone Group. It trades about -0.02 of its total potential returns per unit of risk. Stepstone Group is currently generating about 0.15 per unit of volatility. If you would invest 4,443 in Stepstone Group on September 2, 2024 and sell it today you would earn a total of 2,146 from holding Stepstone Group or generate 48.3% 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. Stepstone Group
Performance |
| Timeline |
| Ultra Clean Holdings |
| Stepstone Group |
Ultra Clean and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and Stepstone
The main advantage of trading using opposite Ultra Clean and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, Stepstone 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 Stepstone will offset losses from the drop in Stepstone's long position.| Ultra Clean vs. NXP Semiconductors NV | Ultra Clean vs. GSI Technology | Ultra Clean vs. MaxLinear | Ultra Clean vs. Texas Instruments Incorporated |
| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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