Correlation Between Applied Materials and Fidelity National
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Fidelity National 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 Fidelity National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Fidelity National Information, you can compare the effects of market volatilities on Applied Materials and Fidelity National 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 Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Fidelity National.
Diversification Opportunities for Applied Materials and Fidelity National
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Applied and Fidelity is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National 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 Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of Applied Materials i.e., Applied Materials and Fidelity National go up and down completely randomly.
Pair Corralation between Applied Materials and Fidelity National
Assuming the 90 days trading horizon Applied Materials is expected to generate 0.65 times more return on investment than Fidelity National. However, Applied Materials is 1.53 times less risky than Fidelity National. It trades about 0.05 of its potential returns per unit of risk. Fidelity National Information is currently generating about 0.02 per unit of risk. If you would invest 10,657 in Applied Materials on October 11, 2024 and sell it today you would earn a total of 7,098 from holding Applied Materials or generate 66.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Applied Materials vs. Fidelity National Information
Performance |
| Timeline |
| Applied Materials |
| Fidelity National |
Applied Materials and Fidelity National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Fidelity National
The main advantage of trading using opposite Applied Materials and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Fidelity National 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 Fidelity National will offset losses from the drop in Fidelity National's long position.| Applied Materials vs. EJF Investments | Applied Materials vs. Live Nation Entertainment | Applied Materials vs. Catalyst Media Group | Applied Materials vs. Lindsell Train Investment |
| Fidelity National vs. Jupiter Fund Management | Fidelity National vs. Scandinavian Tobacco Group | Fidelity National vs. JD Sports Fashion | Fidelity National vs. Applied Materials |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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