Correlation Between Amcor Plc and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both Amcor 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 Amcor 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 Amcor plc and APPLIED MATERIALS, you can compare the effects of market volatilities on Amcor 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 Amcor Plc with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amcor Plc and APPLIED MATERIALS.
Diversification Opportunities for Amcor Plc and APPLIED MATERIALS
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Amcor and APPLIED is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Amcor plc and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS and Amcor 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 Amcor plc 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 Amcor Plc i.e., Amcor Plc and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between Amcor Plc and APPLIED MATERIALS
Assuming the 90 days trading horizon Amcor Plc is expected to generate 4.86 times less return on investment than APPLIED MATERIALS. But when comparing it to its historical volatility, Amcor plc is 1.65 times less risky than APPLIED MATERIALS. It trades about 0.13 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 15,826 in APPLIED MATERIALS on October 24, 2024 and sell it today you would earn a total of 2,680 from holding APPLIED MATERIALS or generate 16.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Amcor plc vs. APPLIED MATERIALS
Performance |
| Timeline |
| Amcor plc |
| APPLIED MATERIALS |
Amcor Plc and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amcor Plc and APPLIED MATERIALS
The main advantage of trading using opposite Amcor Plc and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amcor 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.| Amcor Plc vs. APPLIED MATERIALS | Amcor Plc vs. NEWELL RUBBERMAID | Amcor Plc vs. Goodyear Tire Rubber | Amcor Plc vs. Mitsui Chemicals |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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