Correlation Between Applied Materials and Supermarket Income
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Supermarket Income 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 Supermarket Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Supermarket Income REIT, you can compare the effects of market volatilities on Applied Materials and Supermarket Income 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 Supermarket Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Supermarket Income.
Diversification Opportunities for Applied Materials and Supermarket Income
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Applied and Supermarket is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Supermarket Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supermarket Income REIT 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 Supermarket Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supermarket Income REIT has no effect on the direction of Applied Materials i.e., Applied Materials and Supermarket Income go up and down completely randomly.
Pair Corralation between Applied Materials and Supermarket Income
Assuming the 90 days trading horizon Applied Materials is expected to generate 9.24 times less return on investment than Supermarket Income. In addition to that, Applied Materials is 1.93 times more volatile than Supermarket Income REIT. It trades about 0.0 of its total potential returns per unit of risk. Supermarket Income REIT is currently generating about 0.08 per unit of volatility. If you would invest 6,607 in Supermarket Income REIT on November 8, 2024 and sell it today you would earn a total of 183.00 from holding Supermarket Income REIT or generate 2.77% 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. Supermarket Income REIT
Performance |
| Timeline |
| Applied Materials |
| Supermarket Income REIT |
Applied Materials and Supermarket Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Supermarket Income
The main advantage of trading using opposite Applied Materials and Supermarket Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Supermarket Income 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 Supermarket Income will offset losses from the drop in Supermarket Income'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 |
| Supermarket Income vs. CVS Health Corp | Supermarket Income vs. CleanTech Lithium plc | Supermarket Income vs. Sartorius Stedim Biotech | Supermarket Income vs. Universal Health Services |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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