Correlation Between Applied Materials and Las Vegas
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Las Vegas 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 Las Vegas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Las Vegas Sands, you can compare the effects of market volatilities on Applied Materials and Las Vegas 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 Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Las Vegas.
Diversification Opportunities for Applied Materials and Las Vegas
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Applied and Las is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands 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 Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Applied Materials i.e., Applied Materials and Las Vegas go up and down completely randomly.
Pair Corralation between Applied Materials and Las Vegas
Assuming the 90 days trading horizon Applied Materials is expected to generate 3.06 times less return on investment than Las Vegas. In addition to that, Applied Materials is 1.08 times more volatile than Las Vegas Sands. It trades about 0.03 of its total potential returns per unit of risk. Las Vegas Sands is currently generating about 0.1 per unit of volatility. If you would invest 72,760 in Las Vegas Sands on November 3, 2024 and sell it today you would earn a total of 22,140 from holding Las Vegas Sands or generate 30.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. Las Vegas Sands
Performance |
| Timeline |
| Applied Materials |
| Las Vegas Sands |
Applied Materials and Las Vegas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Las Vegas
The main advantage of trading using opposite Applied Materials and Las Vegas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Las Vegas 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 Las Vegas will offset losses from the drop in Las Vegas' long position.| Applied Materials vs. Delta Air Lines | Applied Materials vs. GMxico Transportes SAB | Applied Materials vs. First Republic Bank | Applied Materials vs. The Home Depot |
| Las Vegas vs. Delta Air Lines | Las Vegas vs. Deutsche Bank Aktiengesellschaft | Las Vegas vs. Costco Wholesale | Las Vegas vs. Verizon Communications |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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