Correlation Between Applied Materials and Broadridge Financial
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Broadridge Financial 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 Applied Materials and Broadridge Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Broadridge Financial Solutions, you can compare the effects of market volatilities on Applied Materials and Broadridge Financial 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 Applied Materials with a short position of Broadridge Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Broadridge Financial.
Diversification Opportunities for Applied Materials and Broadridge Financial
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Applied and Broadridge is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Broadridge Financial Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadridge Financial and Applied Materials 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 Applied Materials are associated (or correlated) with Broadridge Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadridge Financial has no effect on the direction of Applied Materials i.e., Applied Materials and Broadridge Financial go up and down completely randomly.
Pair Corralation between Applied Materials and Broadridge Financial
Assuming the 90 days trading horizon Applied Materials is expected to generate 1.85 times more return on investment than Broadridge Financial. However, Applied Materials is 1.85 times more volatile than Broadridge Financial Solutions. It trades about 0.06 of its potential returns per unit of risk. Broadridge Financial Solutions is currently generating about 0.1 per unit of risk. If you would invest 9,518 in Applied Materials on September 12, 2024 and sell it today you would earn a total of 7,658 from holding Applied Materials or generate 80.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.94% |
| Values | Daily Returns |
Applied Materials vs. Broadridge Financial Solutions
Performance |
| Timeline |
| Applied Materials |
| Broadridge Financial |
Applied Materials and Broadridge Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Broadridge Financial
The main advantage of trading using opposite Applied Materials and Broadridge Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Broadridge Financial 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 Broadridge Financial will offset losses from the drop in Broadridge Financial's long position.| Applied Materials vs. Hong Kong Land | Applied Materials vs. Neometals | Applied Materials vs. Coor Service Management | Applied Materials vs. Fidelity Sustainable USD |
| Broadridge Financial vs. Hong Kong Land | Broadridge Financial vs. Neometals | Broadridge Financial vs. Coor Service Management | Broadridge Financial vs. Fidelity Sustainable USD |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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