Correlation Between Vitec Software and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Vitec Software and Applied Materials 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 Vitec Software and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vitec Software Group and Applied Materials, you can compare the effects of market volatilities on Vitec Software and Applied Materials 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 Vitec Software with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vitec Software and Applied Materials.
Diversification Opportunities for Vitec Software and Applied Materials
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vitec and Applied is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Vitec Software 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 Vitec Software Group are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Vitec Software i.e., Vitec Software and Applied Materials go up and down completely randomly.
Pair Corralation between Vitec Software and Applied Materials
Assuming the 90 days trading horizon Vitec Software is expected to generate 3.47 times less return on investment than Applied Materials. In addition to that, Vitec Software is 1.19 times more volatile than Applied Materials. It trades about 0.09 of its total potential returns per unit of risk. Applied Materials is currently generating about 0.37 per unit of volatility. If you would invest 16,817 in Applied Materials on October 25, 2024 and sell it today you would earn a total of 2,971 from holding Applied Materials or generate 17.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vitec Software Group vs. Applied Materials
Performance |
| Timeline |
| Vitec Software Group |
| Applied Materials |
Vitec Software and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vitec Software and Applied Materials
The main advantage of trading using opposite Vitec Software and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vitec Software position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| Vitec Software vs. Cairo Communication SpA | Vitec Software vs. Verizon Communications | Vitec Software vs. Nordic Semiconductor ASA | Vitec Software vs. Westlake Chemical Corp |
| Applied Materials vs. Toyota Motor Corp | Applied Materials vs. SoftBank Group Corp | Applied Materials vs. OTP Bank Nyrt | Applied Materials vs. ONEOK Inc |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |