Correlation Between Veeco Instrument and Lam Research

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Can any of the company-specific risk be diversified away by investing in both Veeco Instrument 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 Instrument 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 Instrument and Lam Research Corp, you can compare the effects of market volatilities on Veeco Instrument 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 Instrument with a short position of Lam Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veeco Instrument and Lam Research.

Diversification Opportunities for Veeco Instrument and Lam Research

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Veeco and Lam Research is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Veeco Instrument 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 Instrument 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 Instrument 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 Instrument i.e., Veeco Instrument and Lam Research go up and down completely randomly.

Pair Corralation between Veeco Instrument and Lam Research

Given the investment horizon of 90 days Veeco Instrument is expected to generate 0.88 times more return on investment than Lam Research. However, Veeco Instrument is 1.13 times less risky than Lam Research. It trades about 0.06 of its potential returns per unit of risk. Lam Research Corp is currently generating about 0.01 per unit of risk. If you would invest  1,756  in Veeco Instrument on July 6, 2022 and sell it today you would earn a total of  156.00  from holding Veeco Instrument or generate 8.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Veeco Instrument  vs.  Lam Research Corp

 Performance (%) 
       Timeline  
Veeco Instrument 
Veeco Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Veeco Instrument are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Veeco Instrument may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Veeco Price Channel

Lam Research Corp 
Lam Research Performance
0 of 100
Over the last 90 days Lam Research Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Lam Research is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Lam Research Price Channel

Veeco Instrument and Lam Research Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Veeco Instrument and Lam Research

The main advantage of trading using opposite Veeco Instrument and Lam Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veeco Instrument 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 Instrument vs. Amazon Inc
The idea behind Veeco Instrument and Lam Research Corp 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.
Lam Research 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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