Correlation Between Neinor Homes and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Neinor Homes 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 Neinor Homes and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neinor Homes SA and Applied Materials, you can compare the effects of market volatilities on Neinor Homes 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 Neinor Homes with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neinor Homes and Applied Materials.
Diversification Opportunities for Neinor Homes and Applied Materials
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Neinor and Applied is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Neinor Homes 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 Neinor Homes SA 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 Neinor Homes i.e., Neinor Homes and Applied Materials go up and down completely randomly.
Pair Corralation between Neinor Homes and Applied Materials
Assuming the 90 days trading horizon Neinor Homes SA is expected to generate 1.08 times more return on investment than Applied Materials. However, Neinor Homes is 1.08 times more volatile than Applied Materials. It trades about -0.04 of its potential returns per unit of risk. Applied Materials is currently generating about -0.2 per unit of risk. If you would invest 1,411 in Neinor Homes SA on January 10, 2025 and sell it today you would lose (65.00) from holding Neinor Homes SA or give up 4.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Neinor Homes SA vs. Applied Materials
Performance |
| Timeline |
| Neinor Homes SA |
| Applied Materials |
Neinor Homes and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neinor Homes and Applied Materials
The main advantage of trading using opposite Neinor Homes and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neinor Homes 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.| Neinor Homes vs. Salesforce | Neinor Homes vs. HANOVER INSURANCE | Neinor Homes vs. Ping An Insurance | Neinor Homes vs. QBE Insurance Group |
| Applied Materials vs. G5 Entertainment AB | Applied Materials vs. Prosiebensat 1 Media | Applied Materials vs. XLMedia PLC | Applied Materials vs. Ubisoft Entertainment SA |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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