Correlation Between Applied Materials and Xperi Corp
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Xperi Corp 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 Xperi Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Xperi Corp, you can compare the effects of market volatilities on Applied Materials and Xperi Corp 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 Xperi Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Xperi Corp.
Diversification Opportunities for Applied Materials and Xperi Corp
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Applied and Xperi is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Xperi Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xperi Corp 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 Xperi Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xperi Corp has no effect on the direction of Applied Materials i.e., Applied Materials and Xperi Corp go up and down completely randomly.
Pair Corralation between Applied Materials and Xperi Corp
Given the investment horizon of 90 days Applied Materials is expected to generate 0.98 times more return on investment than Xperi Corp. However, Applied Materials is 1.02 times less risky than Xperi Corp. It trades about 0.04 of its potential returns per unit of risk. Xperi Corp is currently generating about -0.01 per unit of risk. If you would invest 15,257 in Applied Materials on November 9, 2024 and sell it today you would earn a total of 3,023 from holding Applied Materials or generate 19.81% 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. Xperi Corp
Performance |
| Timeline |
| Applied Materials |
| Xperi Corp |
Applied Materials and Xperi Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Xperi Corp
The main advantage of trading using opposite Applied Materials and Xperi Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Xperi Corp 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 Xperi Corp will offset losses from the drop in Xperi Corp's long position.| Applied Materials vs. KLA Tencor | Applied Materials vs. ASML Holding NV | Applied Materials vs. Axcelis Technologies | Applied Materials vs. Teradyne |
| Xperi Corp vs. Enfusion | Xperi Corp vs. Alkami Technology | Xperi Corp vs. Clearwater Analytics Holdings | Xperi Corp vs. Expensify |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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