Correlation Between Applied Materials and Oxford Metrics
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Oxford Metrics 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 Oxford Metrics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Oxford Metrics plc, you can compare the effects of market volatilities on Applied Materials and Oxford Metrics 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 Oxford Metrics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Oxford Metrics.
Diversification Opportunities for Applied Materials and Oxford Metrics
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Applied and Oxford is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Oxford Metrics plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Metrics plc 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 Oxford Metrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Metrics plc has no effect on the direction of Applied Materials i.e., Applied Materials and Oxford Metrics go up and down completely randomly.
Pair Corralation between Applied Materials and Oxford Metrics
Assuming the 90 days trading horizon Applied Materials is expected to generate 1.37 times more return on investment than Oxford Metrics. However, Applied Materials is 1.37 times more volatile than Oxford Metrics plc. It trades about -0.1 of its potential returns per unit of risk. Oxford Metrics plc is currently generating about -0.24 per unit of risk. If you would invest 18,538 in Applied Materials on September 13, 2024 and sell it today you would lose (1,351) from holding Applied Materials or give up 7.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Applied Materials vs. Oxford Metrics plc
Performance |
| Timeline |
| Applied Materials |
| Oxford Metrics plc |
Applied Materials and Oxford Metrics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Oxford Metrics
The main advantage of trading using opposite Applied Materials and Oxford Metrics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Oxford Metrics 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 Oxford Metrics will offset losses from the drop in Oxford Metrics' long position.| Applied Materials vs. Samsung Electronics Co | Applied Materials vs. Samsung Electronics Co | Applied Materials vs. Hyundai Motor | Applied Materials vs. Reliance Industries Ltd |
| Oxford Metrics vs. Lloyds Banking Group | Oxford Metrics vs. Applied Materials | Oxford Metrics vs. Martin Marietta Materials | Oxford Metrics vs. Edita Food Industries |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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