Correlation Between Veeco Instruments and ADTRAN

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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

VeecoADTRANDiversified AwayVeecoADTRANDiversified Away100%
-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Veeco and ADTRAN is -0.65. 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 1.45 times less risky than ADTRAN. The stock trades about -0.07 of its potential returns per unit of risk. The ADTRAN Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,031  in ADTRAN Inc on November 25, 2024 and sell it today you would earn a total of  53.00  from holding ADTRAN Inc or generate 5.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Veeco Instruments  vs.  ADTRAN Inc

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10010203040
JavaScript chart by amCharts 3.21.15VECO ADTN
       Timeline  
Veeco Instruments 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Veeco Instruments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2324252627282930
ADTRAN Inc 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in ADTRAN Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, ADTRAN displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb88.599.51010.51111.512

Veeco Instruments and ADTRAN Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.92-2.94-1.95-0.970.00.91.842.783.714.65 0.0350.0400.0450.0500.0550.0600.0650.070
JavaScript chart by amCharts 3.21.15VECO ADTN
       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.
The idea behind Veeco Instruments and ADTRAN Inc 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.
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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