Correlation Between Applied Materials, and AvalonBay Communities
Can any of the company-specific risk be diversified away by investing in both Applied Materials, and AvalonBay Communities 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 Applied Materials, and AvalonBay Communities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials, and AvalonBay Communities, you can compare the effects of market volatilities on Applied Materials, and AvalonBay Communities 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 Applied Materials, with a short position of AvalonBay Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials, and AvalonBay Communities.
Diversification Opportunities for Applied Materials, and AvalonBay Communities
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Applied and AvalonBay is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials, and AvalonBay Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AvalonBay Communities and Applied Materials, 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 Applied Materials, are associated (or correlated) with AvalonBay Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AvalonBay Communities has no effect on the direction of Applied Materials, i.e., Applied Materials, and AvalonBay Communities go up and down completely randomly.
Pair Corralation between Applied Materials, and AvalonBay Communities
Assuming the 90 days trading horizon Applied Materials, is expected to under-perform the AvalonBay Communities. In addition to that, Applied Materials, is 1.73 times more volatile than AvalonBay Communities. It trades about -0.04 of its total potential returns per unit of risk. AvalonBay Communities is currently generating about 0.08 per unit of volatility. If you would invest 27,594 in AvalonBay Communities on October 17, 2024 and sell it today you would earn a total of 5,092 from holding AvalonBay Communities or generate 18.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.93% |
| Values | Daily Returns |
Applied Materials, vs. AvalonBay Communities
Performance |
| Timeline |
| Applied Materials, |
| AvalonBay Communities |
Applied Materials, and AvalonBay Communities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials, and AvalonBay Communities
The main advantage of trading using opposite Applied Materials, and AvalonBay Communities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials, position performs unexpectedly, AvalonBay Communities 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 AvalonBay Communities will offset losses from the drop in AvalonBay Communities' long position.| Applied Materials, vs. STMicroelectronics NV | Applied Materials, vs. Zoom Video Communications | Applied Materials, vs. Charter Communications | Applied Materials, vs. Liberty Broadband |
| AvalonBay Communities vs. Applied Materials, | AvalonBay Communities vs. GP Investments | AvalonBay Communities vs. Electronic Arts | AvalonBay Communities vs. METISA Metalrgica Timboense |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |