Correlation Between WT Offshore and KLA Tencor
Can any of the company-specific risk be diversified away by investing in both WT Offshore and KLA Tencor 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 WT Offshore and KLA Tencor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WT Offshore and KLA Tencor, you can compare the effects of market volatilities on WT Offshore and KLA Tencor 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 WT Offshore with a short position of KLA Tencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT Offshore and KLA Tencor.
Diversification Opportunities for WT Offshore and KLA Tencor
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WTI and KLA is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding WT Offshore and KLA Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Tencor and WT Offshore 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 WT Offshore are associated (or correlated) with KLA Tencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Tencor has no effect on the direction of WT Offshore i.e., WT Offshore and KLA Tencor go up and down completely randomly.
Pair Corralation between WT Offshore and KLA Tencor
Considering the 90-day investment horizon WT Offshore is expected to under-perform the KLA Tencor. In addition to that, WT Offshore is 1.3 times more volatile than KLA Tencor. It trades about -0.05 of its total potential returns per unit of risk. KLA Tencor is currently generating about 0.05 per unit of volatility. If you would invest 39,988 in KLA Tencor on August 31, 2024 and sell it today you would earn a total of 24,715 from holding KLA Tencor or generate 61.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WT Offshore vs. KLA Tencor
Performance |
| Timeline |
| WT Offshore |
| KLA Tencor |
WT Offshore and KLA Tencor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WT Offshore and KLA Tencor
The main advantage of trading using opposite WT Offshore and KLA Tencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT Offshore position performs unexpectedly, KLA Tencor 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 KLA Tencor will offset losses from the drop in KLA Tencor's long position.| WT Offshore vs. Evolution Petroleum | WT Offshore vs. Ring Energy | WT Offshore vs. Gran Tierra Energy | WT Offshore vs. Permian Resources |
| KLA Tencor vs. Applied Materials | KLA Tencor vs. ASML Holding NV | KLA Tencor vs. Axcelis Technologies | KLA Tencor 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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