Correlation Between Applied Materials and UBS Group
Can any of the company-specific risk be diversified away by investing in both Applied Materials and UBS Group 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 UBS Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and UBS Group AG, you can compare the effects of market volatilities on Applied Materials and UBS Group 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 UBS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and UBS Group.
Diversification Opportunities for Applied Materials and UBS Group
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Applied and UBS is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and UBS Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Group AG 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 UBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Group AG has no effect on the direction of Applied Materials i.e., Applied Materials and UBS Group go up and down completely randomly.
Pair Corralation between Applied Materials and UBS Group
Assuming the 90 days trading horizon Applied Materials is expected to under-perform the UBS Group. In addition to that, Applied Materials is 8.51 times more volatile than UBS Group AG. It trades about -0.13 of its total potential returns per unit of risk. UBS Group AG is currently generating about 0.32 per unit of volatility. If you would invest 64,400 in UBS Group AG on September 12, 2024 and sell it today you would earn a total of 1,600 from holding UBS Group AG or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Applied Materials vs. UBS Group AG
Performance |
| Timeline |
| Applied Materials |
| UBS Group AG |
Applied Materials and UBS Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and UBS Group
The main advantage of trading using opposite Applied Materials and UBS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, UBS Group 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 UBS Group will offset losses from the drop in UBS Group'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 |
| UBS Group vs. Costco Wholesale | UBS Group vs. United Airlines Holdings | UBS Group vs. Applied Materials | UBS Group vs. Grupo Carso SAB |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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