Correlation Between Applied Materials and GREENX METALS
Can any of the company-specific risk be diversified away by investing in both Applied Materials and GREENX METALS 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 GREENX METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and GREENX METALS LTD, you can compare the effects of market volatilities on Applied Materials and GREENX METALS 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 GREENX METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and GREENX METALS.
Diversification Opportunities for Applied Materials and GREENX METALS
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Applied and GREENX is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and GREENX METALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENX METALS LTD 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 GREENX METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENX METALS LTD has no effect on the direction of Applied Materials i.e., Applied Materials and GREENX METALS go up and down completely randomly.
Pair Corralation between Applied Materials and GREENX METALS
Assuming the 90 days horizon Applied Materials is expected to generate 2.92 times less return on investment than GREENX METALS. In addition to that, Applied Materials is 1.22 times more volatile than GREENX METALS LTD. It trades about 0.09 of its total potential returns per unit of risk. GREENX METALS LTD is currently generating about 0.31 per unit of volatility. If you would invest 40.00 in GREENX METALS LTD on October 15, 2024 and sell it today you would earn a total of 4.00 from holding GREENX METALS LTD or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. GREENX METALS LTD
Performance |
| Timeline |
| Applied Materials |
| GREENX METALS LTD |
Applied Materials and GREENX METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and GREENX METALS
The main advantage of trading using opposite Applied Materials and GREENX METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, GREENX METALS 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 GREENX METALS will offset losses from the drop in GREENX METALS's long position.| Applied Materials vs. Data Modul AG | Applied Materials vs. VULCAN MATERIALS | Applied Materials vs. Martin Marietta Materials | Applied Materials vs. EAGLE MATERIALS |
| GREENX METALS vs. Ryanair Holdings plc | GREENX METALS vs. Fair Isaac Corp | GREENX METALS vs. Canadian Utilities Limited | GREENX METALS vs. SOUTHWEST AIRLINES |
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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