Correlation Between FinecoBank SpA and Applied Materials
Can any of the company-specific risk be diversified away by investing in both FinecoBank SpA 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 FinecoBank SpA and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FinecoBank SpA and Applied Materials, you can compare the effects of market volatilities on FinecoBank SpA 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 FinecoBank SpA with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of FinecoBank SpA and Applied Materials.
Diversification Opportunities for FinecoBank SpA and Applied Materials
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FinecoBank and Applied is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding FinecoBank SpA and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and FinecoBank SpA 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 FinecoBank SpA 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 FinecoBank SpA i.e., FinecoBank SpA and Applied Materials go up and down completely randomly.
Pair Corralation between FinecoBank SpA and Applied Materials
Assuming the 90 days trading horizon FinecoBank SpA is expected to generate 1.32 times less return on investment than Applied Materials. But when comparing it to its historical volatility, FinecoBank SpA is 2.55 times less risky than Applied Materials. It trades about 0.24 of its potential returns per unit of risk. Applied Materials is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 16,827 in Applied Materials on October 11, 2024 and sell it today you would earn a total of 928.00 from holding Applied Materials or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FinecoBank SpA vs. Applied Materials
Performance |
| Timeline |
| FinecoBank SpA |
| Applied Materials |
FinecoBank SpA and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FinecoBank SpA and Applied Materials
The main advantage of trading using opposite FinecoBank SpA and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FinecoBank SpA 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' long position.| FinecoBank SpA vs. JB Hunt Transport | FinecoBank SpA vs. Teradata Corp | FinecoBank SpA vs. Automatic Data Processing | FinecoBank SpA vs. PPHE Hotel Group |
| Applied Materials vs. iShares Physical Silver | Applied Materials vs. Jacquet Metal Service | Applied Materials vs. Europa Metals | Applied Materials vs. Empire Metals Limited |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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