Correlation Between Applied Materials and Ichor Holdings
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Ichor Holdings 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 Ichor Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Ichor Holdings, you can compare the effects of market volatilities on Applied Materials and Ichor Holdings 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 Ichor Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Ichor Holdings.
Diversification Opportunities for Applied Materials and Ichor Holdings
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Applied and Ichor is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Ichor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor Holdings 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 Ichor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichor Holdings has no effect on the direction of Applied Materials i.e., Applied Materials and Ichor Holdings go up and down completely randomly.
Pair Corralation between Applied Materials and Ichor Holdings
Given the investment horizon of 90 days Applied Materials is expected to generate 0.81 times more return on investment than Ichor Holdings. However, Applied Materials is 1.23 times less risky than Ichor Holdings. It trades about 0.05 of its potential returns per unit of risk. Ichor Holdings is currently generating about 0.02 per unit of risk. If you would invest 10,553 in Applied Materials on August 30, 2024 and sell it today you would earn a total of 6,579 from holding Applied Materials or generate 62.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Applied Materials vs. Ichor Holdings
Performance |
| Timeline |
| Applied Materials |
| Ichor Holdings |
Applied Materials and Ichor Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Ichor Holdings
The main advantage of trading using opposite Applied Materials and Ichor Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Ichor Holdings 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 Ichor Holdings will offset losses from the drop in Ichor Holdings' long position.| Applied Materials vs. KLA Tencor | Applied Materials vs. ASML Holding NV | Applied Materials vs. Axcelis Technologies | Applied Materials vs. Teradyne |
| Ichor Holdings vs. First Solar | Ichor Holdings vs. Sunrun Inc | Ichor Holdings vs. Canadian Solar | Ichor Holdings vs. SolarEdge Technologies |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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