Correlation Between Nomad Foods and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both Nomad Foods and APPLIED MATERIALS 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 Nomad Foods and APPLIED MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomad Foods and APPLIED MATERIALS, you can compare the effects of market volatilities on Nomad Foods and APPLIED MATERIALS 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 Nomad Foods with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomad Foods and APPLIED MATERIALS.
Diversification Opportunities for Nomad Foods and APPLIED MATERIALS
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nomad and APPLIED is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS and Nomad Foods 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 Nomad Foods are associated (or correlated) with APPLIED MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLIED MATERIALS has no effect on the direction of Nomad Foods i.e., Nomad Foods and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between Nomad Foods and APPLIED MATERIALS
Assuming the 90 days trading horizon Nomad Foods is expected to generate 1.23 times less return on investment than APPLIED MATERIALS. But when comparing it to its historical volatility, Nomad Foods is 1.53 times less risky than APPLIED MATERIALS. It trades about 0.16 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 15,968 in APPLIED MATERIALS on November 3, 2024 and sell it today you would earn a total of 1,404 from holding APPLIED MATERIALS or generate 8.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomad Foods vs. APPLIED MATERIALS
Performance |
| Timeline |
| Nomad Foods |
| APPLIED MATERIALS |
Nomad Foods and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomad Foods and APPLIED MATERIALS
The main advantage of trading using opposite Nomad Foods and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomad Foods position performs unexpectedly, APPLIED MATERIALS 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 APPLIED MATERIALS will offset losses from the drop in APPLIED MATERIALS's long position.| Nomad Foods vs. AGRICULTBK HADR25 YC | Nomad Foods vs. SIERRA METALS | Nomad Foods vs. Dairy Farm International | Nomad Foods vs. DAIDO METAL TD |
| APPLIED MATERIALS vs. SEKISUI CHEMICAL | APPLIED MATERIALS vs. China BlueChemical | APPLIED MATERIALS vs. Mitsubishi Gas Chemical | APPLIED MATERIALS vs. X FAB Silicon Foundries |
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 Stocks Directory module to find actively traded stocks across global markets.
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