Correlation Between TRAINLINE PLC and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC 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 TRAINLINE PLC and APPLIED MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAINLINE PLC LS and APPLIED MATERIALS, you can compare the effects of market volatilities on TRAINLINE PLC 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 TRAINLINE PLC with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and APPLIED MATERIALS.
Diversification Opportunities for TRAINLINE PLC and APPLIED MATERIALS
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between TRAINLINE and APPLIED is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS and TRAINLINE PLC 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 TRAINLINE PLC LS 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 TRAINLINE PLC i.e., TRAINLINE PLC and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and APPLIED MATERIALS
Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to generate 0.98 times more return on investment than APPLIED MATERIALS. However, TRAINLINE PLC LS is 1.02 times less risky than APPLIED MATERIALS. It trades about 0.18 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about -0.06 per unit of risk. If you would invest 398.00 in TRAINLINE PLC LS on August 29, 2024 and sell it today you would earn a total of 84.00 from holding TRAINLINE PLC LS or generate 21.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
TRAINLINE PLC LS vs. APPLIED MATERIALS
Performance |
| Timeline |
| TRAINLINE PLC LS |
| APPLIED MATERIALS |
TRAINLINE PLC and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAINLINE PLC and APPLIED MATERIALS
The main advantage of trading using opposite TRAINLINE PLC and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC 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.| TRAINLINE PLC vs. TRAVEL LEISURE DL 01 | TRAINLINE PLC vs. TUI AG | TRAINLINE PLC vs. TripAdvisor | TRAINLINE PLC vs. FOSTOURGRP EO 0001 |
| APPLIED MATERIALS vs. The Hanover Insurance | APPLIED MATERIALS vs. ZINC MEDIA GR | APPLIED MATERIALS vs. PARKEN Sport Entertainment | APPLIED MATERIALS vs. SBI Insurance Group |
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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