Correlation Between SIVERS SEMICONDUCTORS and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS and APPLIED MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIVERS SEMICONDUCTORS AB and APPLIED MATERIALS, you can compare the effects of market volatilities on SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIVERS SEMICONDUCTORS and APPLIED MATERIALS.
Diversification Opportunities for SIVERS SEMICONDUCTORS and APPLIED MATERIALS
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SIVERS and APPLIED is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SIVERS SEMICONDUCTORS AB and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS and SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS AB 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 SIVERS SEMICONDUCTORS i.e., SIVERS SEMICONDUCTORS and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between SIVERS SEMICONDUCTORS and APPLIED MATERIALS
Assuming the 90 days horizon SIVERS SEMICONDUCTORS AB is expected to under-perform the APPLIED MATERIALS. In addition to that, SIVERS SEMICONDUCTORS is 4.8 times more volatile than APPLIED MATERIALS. It trades about -0.1 of its total potential returns per unit of risk. APPLIED MATERIALS is currently generating about -0.02 per unit of volatility. If you would invest 16,888 in APPLIED MATERIALS on September 2, 2024 and sell it today you would lose (356.00) from holding APPLIED MATERIALS or give up 2.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIVERS SEMICONDUCTORS AB vs. APPLIED MATERIALS
Performance |
| Timeline |
| SIVERS SEMICONDUCTORS |
| APPLIED MATERIALS |
SIVERS SEMICONDUCTORS and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIVERS SEMICONDUCTORS and APPLIED MATERIALS
The main advantage of trading using opposite SIVERS SEMICONDUCTORS and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIVERS SEMICONDUCTORS 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's long position.The idea behind SIVERS SEMICONDUCTORS AB and APPLIED MATERIALS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| APPLIED MATERIALS vs. SBM OFFSHORE | APPLIED MATERIALS vs. Wizz Air Holdings | APPLIED MATERIALS vs. Selective Insurance Group | APPLIED MATERIALS vs. Japan Post Insurance |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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