Correlation Between Growth Fund and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Growth Fund 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 Growth Fund and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Applied Materials, you can compare the effects of market volatilities on Growth Fund 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 Growth Fund with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Applied Materials.
Diversification Opportunities for Growth Fund and Applied Materials
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Growth and Applied is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Growth Fund 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 Growth Fund Of 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 Growth Fund i.e., Growth Fund and Applied Materials go up and down completely randomly.
Pair Corralation between Growth Fund and Applied Materials
Assuming the 90 days horizon Growth Fund is expected to generate 1.38 times less return on investment than Applied Materials. But when comparing it to its historical volatility, Growth Fund Of is 2.65 times less risky than Applied Materials. It trades about 0.1 of its potential returns per unit of risk. Applied Materials is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 287,503 in Applied Materials on November 3, 2024 and sell it today you would earn a total of 87,197 from holding Applied Materials or generate 30.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Growth Fund Of vs. Applied Materials
Performance |
| Timeline |
| Growth Fund |
| Applied Materials |
Growth Fund and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Applied Materials
The main advantage of trading using opposite Growth Fund and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund 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' long position.| Growth Fund vs. Capital World Growth | Growth Fund vs. Europacific Growth Fund | Growth Fund vs. New Perspective Fund | Growth Fund vs. Investment Of America |
| Applied Materials vs. Delta Air Lines | Applied Materials vs. GMxico Transportes SAB | Applied Materials vs. First Republic Bank | Applied Materials vs. The Home Depot |
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 Stocks Directory module to find actively traded stocks across global markets.
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