Correlation Between Applied Materials and Vitro SAB
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Vitro SAB 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 Vitro SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Vitro SAB de, you can compare the effects of market volatilities on Applied Materials and Vitro SAB 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 Vitro SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Vitro SAB.
Diversification Opportunities for Applied Materials and Vitro SAB
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Applied and Vitro is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Vitro SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitro SAB de 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 Vitro SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitro SAB de has no effect on the direction of Applied Materials i.e., Applied Materials and Vitro SAB go up and down completely randomly.
Pair Corralation between Applied Materials and Vitro SAB
Assuming the 90 days trading horizon Applied Materials is expected to under-perform the Vitro SAB. In addition to that, Applied Materials is 2.92 times more volatile than Vitro SAB de. It trades about -0.04 of its total potential returns per unit of risk. Vitro SAB de is currently generating about 0.11 per unit of volatility. If you would invest 880.00 in Vitro SAB de on September 2, 2024 and sell it today you would earn a total of 20.00 from holding Vitro SAB de or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. Vitro SAB de
Performance |
| Timeline |
| Applied Materials |
| Vitro SAB de |
Applied Materials and Vitro SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Vitro SAB
The main advantage of trading using opposite Applied Materials and Vitro SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Vitro SAB 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 Vitro SAB will offset losses from the drop in Vitro SAB's long position.| Applied Materials vs. The Bank of | Applied Materials vs. Grupo Sports World | Applied Materials vs. Monster Beverage Corp | Applied Materials vs. United Airlines Holdings |
| Vitro SAB vs. Applied Materials | Vitro SAB vs. Samsung Electronics Co | Vitro SAB vs. United Airlines Holdings | Vitro SAB vs. McEwen Mining |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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