Correlation Between Applied Materials, and Academy Sports
Can any of the company-specific risk be diversified away by investing in both Applied Materials, and Academy Sports 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 Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials, and Academy Sports and, you can compare the effects of market volatilities on Applied Materials, and Academy Sports 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 Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials, and Academy Sports.
Diversification Opportunities for Applied Materials, and Academy Sports
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Applied and Academy is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials, and Academy Sports and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Academy Sports 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 Academy Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Academy Sports has no effect on the direction of Applied Materials, i.e., Applied Materials, and Academy Sports go up and down completely randomly.
Pair Corralation between Applied Materials, and Academy Sports
Assuming the 90 days trading horizon Applied Materials, is expected to generate 7.11 times more return on investment than Academy Sports. However, Applied Materials, is 7.11 times more volatile than Academy Sports and. It trades about 0.08 of its potential returns per unit of risk. Academy Sports and is currently generating about -0.35 per unit of risk. If you would invest 10,398 in Applied Materials, on November 4, 2024 and sell it today you would earn a total of 517.00 from holding Applied Materials, or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
Applied Materials, vs. Academy Sports and
Performance |
| Timeline |
| Applied Materials, |
| Academy Sports |
Applied Materials, and Academy Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials, and Academy Sports
The main advantage of trading using opposite Applied Materials, and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials, position performs unexpectedly, Academy Sports 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 Academy Sports will offset losses from the drop in Academy Sports' long position.| Applied Materials, vs. JB Hunt Transport | Applied Materials, vs. Spotify Technology SA | Applied Materials, vs. Trane Technologies plc | Applied Materials, vs. Cognizant Technology Solutions |
| Academy Sports vs. Healthpeak Properties | Academy Sports vs. HCA Healthcare, | Academy Sports vs. METISA Metalrgica Timboense | Academy Sports vs. Universal Health Services, |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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