Correlation Between Applied Materials and Naturhouse Health
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Naturhouse Health 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 Naturhouse Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Naturhouse Health SA, you can compare the effects of market volatilities on Applied Materials and Naturhouse Health 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 Naturhouse Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Naturhouse Health.
Diversification Opportunities for Applied Materials and Naturhouse Health
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Applied and Naturhouse is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Naturhouse Health SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturhouse Health 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 Naturhouse Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturhouse Health has no effect on the direction of Applied Materials i.e., Applied Materials and Naturhouse Health go up and down completely randomly.
Pair Corralation between Applied Materials and Naturhouse Health
Assuming the 90 days trading horizon Applied Materials is expected to generate 6.26 times less return on investment than Naturhouse Health. In addition to that, Applied Materials is 2.23 times more volatile than Naturhouse Health SA. It trades about 0.01 of its total potential returns per unit of risk. Naturhouse Health SA is currently generating about 0.09 per unit of volatility. If you would invest 176.00 in Naturhouse Health SA on November 7, 2024 and sell it today you would earn a total of 5.00 from holding Naturhouse Health SA or generate 2.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. Naturhouse Health SA
Performance |
| Timeline |
| Applied Materials |
| Naturhouse Health |
Applied Materials and Naturhouse Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Naturhouse Health
The main advantage of trading using opposite Applied Materials and Naturhouse Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Naturhouse Health 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 Naturhouse Health will offset losses from the drop in Naturhouse Health's long position.| Applied Materials vs. MTI Wireless Edge | Applied Materials vs. AcadeMedia AB | Applied Materials vs. Live Nation Entertainment | Applied Materials vs. Wyndham Hotels Resorts |
| Naturhouse Health vs. Tyson Foods Cl | Naturhouse Health vs. Deutsche Pfandbriefbank AG | Naturhouse Health vs. Berner Kantonalbank AG | Naturhouse Health vs. Arrow Electronics |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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