Correlation Between Veeco Instruments and Lam Research
Can any of the company-specific risk be diversified away by investing in both Veeco Instruments and Lam Research 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 Lam Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veeco Instruments and Lam Research Corp, you can compare the effects of market volatilities on Veeco Instruments and Lam Research 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 Lam Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veeco Instruments and Lam Research.
Diversification Opportunities for Veeco Instruments and Lam Research
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Veeco and Lam is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Veeco Instruments and Lam Research Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Research Corp 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 Lam Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Research Corp has no effect on the direction of Veeco Instruments i.e., Veeco Instruments and Lam Research go up and down completely randomly.
Pair Corralation between Veeco Instruments and Lam Research
Given the investment horizon of 90 days Veeco Instruments is expected to under-perform the Lam Research. But the stock apears to be less risky and, when comparing its historical volatility, Veeco Instruments is 1.18 times less risky than Lam Research. The stock trades about -0.06 of its potential returns per unit of risk. The Lam Research Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,262 in Lam Research Corp on October 20, 2024 and sell it today you would earn a total of 768.00 from holding Lam Research Corp or generate 10.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veeco Instruments vs. Lam Research Corp
Performance |
| Timeline |
| Veeco Instruments |
| Lam Research Corp |
Veeco Instruments and Lam Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veeco Instruments and Lam Research
The main advantage of trading using opposite Veeco Instruments and Lam Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veeco Instruments position performs unexpectedly, Lam Research 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 Lam Research will offset losses from the drop in Lam Research's long position.| Veeco Instruments vs. NVE Corporation | Veeco Instruments vs. Photronics | Veeco Instruments vs. Kulicke and Soffa | Veeco Instruments vs. Alvarium Tiedemann Holdings |
| Lam Research vs. ASML Holding NV | Lam Research vs. KLA Tencor | Lam Research vs. Axcelis Technologies | Lam Research vs. Teradyne |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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