Correlation Between Veeco Instruments and Axcelis Technologies
Can any of the company-specific risk be diversified away by investing in both Veeco Instruments and Axcelis Technologies 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 Veeco Instruments and Axcelis Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veeco Instruments and Axcelis Technologies, you can compare the effects of market volatilities on Veeco Instruments and Axcelis Technologies 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 Veeco Instruments with a short position of Axcelis Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veeco Instruments and Axcelis Technologies.
Diversification Opportunities for Veeco Instruments and Axcelis Technologies
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Veeco and Axcelis is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Veeco Instruments and Axcelis Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axcelis Technologies and Veeco Instruments 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 Veeco Instruments are associated (or correlated) with Axcelis Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axcelis Technologies has no effect on the direction of Veeco Instruments i.e., Veeco Instruments and Axcelis Technologies go up and down completely randomly.
Pair Corralation between Veeco Instruments and Axcelis Technologies
Given the investment horizon of 90 days Veeco Instruments is expected to generate 0.75 times more return on investment than Axcelis Technologies. However, Veeco Instruments is 1.34 times less risky than Axcelis Technologies. It trades about -0.09 of its potential returns per unit of risk. Axcelis Technologies is currently generating about -0.24 per unit of risk. If you would invest 2,924 in Veeco Instruments on August 28, 2024 and sell it today you would lose (127.00) from holding Veeco Instruments or give up 4.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veeco Instruments vs. Axcelis Technologies
Performance |
| Timeline |
| Veeco Instruments |
| Axcelis Technologies |
Veeco Instruments and Axcelis Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veeco Instruments and Axcelis Technologies
The main advantage of trading using opposite Veeco Instruments and Axcelis Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veeco Instruments position performs unexpectedly, Axcelis Technologies 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 Axcelis Technologies will offset losses from the drop in Axcelis Technologies' long position.The idea behind Veeco Instruments and Axcelis Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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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