Correlation Between Applied Materials and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Jacquet Metal 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 Jacquet Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Jacquet Metal Service, you can compare the effects of market volatilities on Applied Materials and Jacquet Metal 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 Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Jacquet Metal.
Diversification Opportunities for Applied Materials and Jacquet Metal
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Applied and Jacquet is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Applied Materials i.e., Applied Materials and Jacquet Metal go up and down completely randomly.
Pair Corralation between Applied Materials and Jacquet Metal
Assuming the 90 days trading horizon Applied Materials is expected to under-perform the Jacquet Metal. In addition to that, Applied Materials is 1.48 times more volatile than Jacquet Metal Service. It trades about -0.12 of its total potential returns per unit of risk. Jacquet Metal Service is currently generating about 0.11 per unit of volatility. If you would invest 1,591 in Jacquet Metal Service on September 12, 2024 and sell it today you would earn a total of 74.00 from holding Jacquet Metal Service or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. Jacquet Metal Service
Performance |
| Timeline |
| Applied Materials |
| Jacquet Metal Service |
Applied Materials and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Jacquet Metal
The main advantage of trading using opposite Applied Materials and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal'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 |
| Jacquet Metal vs. Hong Kong Land | Jacquet Metal vs. Neometals | Jacquet Metal vs. Coor Service Management | Jacquet Metal 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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