Correlation Between Applied Materials and G5 Entertainment
Can any of the company-specific risk be diversified away by investing in both Applied Materials and G5 Entertainment 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 G5 Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and G5 Entertainment AB, you can compare the effects of market volatilities on Applied Materials and G5 Entertainment 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 G5 Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and G5 Entertainment.
Diversification Opportunities for Applied Materials and G5 Entertainment
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Applied and 0QUS is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and G5 Entertainment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G5 Entertainment 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 G5 Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G5 Entertainment has no effect on the direction of Applied Materials i.e., Applied Materials and G5 Entertainment go up and down completely randomly.
Pair Corralation between Applied Materials and G5 Entertainment
Assuming the 90 days trading horizon Applied Materials is expected to generate 2.12 times less return on investment than G5 Entertainment. In addition to that, Applied Materials is 1.65 times more volatile than G5 Entertainment AB. It trades about 0.07 of its total potential returns per unit of risk. G5 Entertainment AB is currently generating about 0.25 per unit of volatility. If you would invest 11,800 in G5 Entertainment AB on November 7, 2024 and sell it today you would earn a total of 1,200 from holding G5 Entertainment AB or generate 10.17% 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. G5 Entertainment AB
Performance |
| Timeline |
| Applied Materials |
| G5 Entertainment |
Applied Materials and G5 Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and G5 Entertainment
The main advantage of trading using opposite Applied Materials and G5 Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, G5 Entertainment 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 G5 Entertainment will offset losses from the drop in G5 Entertainment's long position.| Applied Materials vs. Pentair PLC | Applied Materials vs. Systemair AB | Applied Materials vs. United Utilities Group | Applied Materials vs. Alaska Air Group |
| G5 Entertainment vs. Qurate Retail Series | G5 Entertainment vs. Nordic Semiconductor ASA | G5 Entertainment vs. Spirent Communications plc | G5 Entertainment vs. United Internet AG |
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.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |