Correlation Between Veeco Instruments and ADTRAN
Can any of the company-specific risk be diversified away by investing in both Veeco Instruments and ADTRAN 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 ADTRAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veeco Instruments and ADTRAN Inc, you can compare the effects of market volatilities on Veeco Instruments and ADTRAN 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 ADTRAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veeco Instruments and ADTRAN.
Diversification Opportunities for Veeco Instruments and ADTRAN
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Veeco and ADTRAN is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Veeco Instruments and ADTRAN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADTRAN Inc 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 ADTRAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADTRAN Inc has no effect on the direction of Veeco Instruments i.e., Veeco Instruments and ADTRAN go up and down completely randomly.
Pair Corralation between Veeco Instruments and ADTRAN
Given the investment horizon of 90 days Veeco Instruments is expected to under-perform the ADTRAN. But the stock apears to be less risky and, when comparing its historical volatility, Veeco Instruments is 2.58 times less risky than ADTRAN. The stock trades about -0.2 of its potential returns per unit of risk. The ADTRAN Inc is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 611.00 in ADTRAN Inc on August 24, 2024 and sell it today you would earn a total of 205.00 from holding ADTRAN Inc or generate 33.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veeco Instruments vs. ADTRAN Inc
Performance |
| Timeline |
| Veeco Instruments |
| ADTRAN Inc |
Veeco Instruments and ADTRAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veeco Instruments and ADTRAN
The main advantage of trading using opposite Veeco Instruments and ADTRAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veeco Instruments position performs unexpectedly, ADTRAN 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 ADTRAN will offset losses from the drop in ADTRAN's long position.| Veeco Instruments vs. Ultra Clean Holdings | Veeco Instruments vs. Cohu Inc | Veeco Instruments vs. Ichor Holdings | Veeco Instruments vs. Entegris |
| ADTRAN vs. Mynaric AG ADR | ADTRAN vs. KVH Industries | ADTRAN vs. Telesat Corp | ADTRAN vs. Digi International |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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