Correlation Between Alphabet and Veeco Instrument

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Can any of the company-specific risk be diversified away by investing in both Alphabet and Veeco Instrument 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 Alphabet and Veeco Instrument into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Cl A and Veeco Instrument, you can compare the effects of market volatilities on Alphabet and Veeco Instrument 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 Alphabet with a short position of Veeco Instrument. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Veeco Instrument.

Diversification Opportunities for Alphabet and Veeco Instrument

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Alphabet and Veeco is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Cl A and Veeco Instrument in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veeco Instrument and Alphabet 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 Alphabet Cl A are associated (or correlated) with Veeco Instrument. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veeco Instrument has no effect on the direction of Alphabet i.e., Alphabet and Veeco Instrument go up and down completely randomly.

Pair Corralation between Alphabet and Veeco Instrument

Assuming the 90 days horizon Alphabet is expected to generate 1.72 times less return on investment than Veeco Instrument. But when comparing it to its historical volatility, Alphabet Cl A is 1.37 times less risky than Veeco Instrument. It trades about 0.03 of its potential returns per unit of risk. Veeco Instrument is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,280  in Veeco Instrument on July 2, 2022 and sell it today you would earn a total of  562.00  from holding Veeco Instrument or generate 43.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Alphabet Cl A  vs.  Veeco Instrument

 Performance (%) 
       Timeline  
Alphabet Cl A 
Alphabet Performance
0 of 100
Over the last 90 days Alphabet Cl A has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively steady which may send shares a bit higher in October 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Alphabet Price Channel

Veeco Instrument 
Veeco Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Veeco Instrument are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Veeco Instrument is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Veeco Price Channel

Alphabet and Veeco Instrument Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alphabet and Veeco Instrument

The main advantage of trading using opposite Alphabet and Veeco Instrument positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Veeco Instrument 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 Veeco Instrument will offset losses from the drop in Veeco Instrument's long position.
Alphabet vs. Tencent Holdings
The idea behind Alphabet Cl A and Veeco Instrument 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.
Veeco Instrument vs. Amazon Inc
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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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