Correlation Between Applied Materials and EVS Broadcast
Can any of the company-specific risk be diversified away by investing in both Applied Materials and EVS Broadcast 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 EVS Broadcast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and EVS Broadcast Equipment, you can compare the effects of market volatilities on Applied Materials and EVS Broadcast 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 EVS Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and EVS Broadcast.
Diversification Opportunities for Applied Materials and EVS Broadcast
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Applied and EVS is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment 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 EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of Applied Materials i.e., Applied Materials and EVS Broadcast go up and down completely randomly.
Pair Corralation between Applied Materials and EVS Broadcast
Assuming the 90 days trading horizon Applied Materials is expected to generate 3.95 times less return on investment than EVS Broadcast. In addition to that, Applied Materials is 1.88 times more volatile than EVS Broadcast Equipment. It trades about 0.01 of its total potential returns per unit of risk. EVS Broadcast Equipment is currently generating about 0.06 per unit of volatility. If you would invest 2,770 in EVS Broadcast Equipment on September 4, 2024 and sell it today you would earn a total of 50.00 from holding EVS Broadcast Equipment or generate 1.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. EVS Broadcast Equipment
Performance |
| Timeline |
| Applied Materials |
| EVS Broadcast Equipment |
Applied Materials and EVS Broadcast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and EVS Broadcast
The main advantage of trading using opposite Applied Materials and EVS Broadcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, EVS Broadcast 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 EVS Broadcast will offset losses from the drop in EVS Broadcast's long position.| Applied Materials vs. Samsung Electronics Co | Applied Materials vs. Samsung Electronics Co | Applied Materials vs. Hyundai Motor | Applied Materials vs. Toyota Motor Corp |
| EVS Broadcast vs. Samsung Electronics Co | EVS Broadcast vs. Samsung Electronics Co | EVS Broadcast vs. Hyundai Motor | EVS Broadcast vs. Toyota Motor Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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