Correlation Between Applied Materials and NOW
Can any of the company-specific risk be diversified away by investing in both Applied Materials and NOW 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 NOW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and NOW Inc, you can compare the effects of market volatilities on Applied Materials and NOW 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 NOW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and NOW.
Diversification Opportunities for Applied Materials and NOW
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Applied and NOW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and NOW Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOW Inc 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 NOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOW Inc has no effect on the direction of Applied Materials i.e., Applied Materials and NOW go up and down completely randomly.
Pair Corralation between Applied Materials and NOW
If you would invest 23,800 in NOW Inc on September 12, 2024 and sell it today you would earn a total of 0.00 from holding NOW Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Applied Materials vs. NOW Inc
Performance |
| Timeline |
| Applied Materials |
| NOW Inc |
Applied Materials and NOW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and NOW
The main advantage of trading using opposite Applied Materials and NOW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, NOW 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 NOW will offset losses from the drop in NOW's long position.| Applied Materials vs. The Select Sector | Applied Materials vs. Promotora y Operadora | Applied Materials vs. iShares Global Timber | Applied Materials vs. SPDR Series Trust |
| NOW vs. Halliburton | NOW vs. The Select Sector | NOW vs. Promotora y Operadora | NOW vs. iShares Global Timber |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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