Correlation Between Applied Materials and Tetragon Financial
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Tetragon Financial 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 Tetragon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Tetragon Financial Group, you can compare the effects of market volatilities on Applied Materials and Tetragon Financial 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 Tetragon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Tetragon Financial.
Diversification Opportunities for Applied Materials and Tetragon Financial
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Applied and Tetragon is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Tetragon Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tetragon Financial 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 Tetragon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tetragon Financial has no effect on the direction of Applied Materials i.e., Applied Materials and Tetragon Financial go up and down completely randomly.
Pair Corralation between Applied Materials and Tetragon Financial
Assuming the 90 days trading horizon Applied Materials is expected to generate 1.41 times less return on investment than Tetragon Financial. In addition to that, Applied Materials is 2.46 times more volatile than Tetragon Financial Group. It trades about 0.03 of its total potential returns per unit of risk. Tetragon Financial Group is currently generating about 0.1 per unit of volatility. If you would invest 958.00 in Tetragon Financial Group on December 11, 2024 and sell it today you would earn a total of 592.00 from holding Tetragon Financial Group or generate 61.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Applied Materials vs. Tetragon Financial Group
Performance |
| Timeline |
| Applied Materials |
| Tetragon Financial |
Applied Materials and Tetragon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Tetragon Financial
The main advantage of trading using opposite Applied Materials and Tetragon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Tetragon Financial 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 Tetragon Financial will offset losses from the drop in Tetragon Financial's long position.| Applied Materials vs. Planet Fitness Cl | ||
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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