Correlation Between Applied Materials and EURASIAN MINERALS
Can any of the company-specific risk be diversified away by investing in both Applied Materials and EURASIAN MINERALS 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 EURASIAN MINERALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and EURASIAN MINERALS, you can compare the effects of market volatilities on Applied Materials and EURASIAN MINERALS 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 EURASIAN MINERALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and EURASIAN MINERALS.
Diversification Opportunities for Applied Materials and EURASIAN MINERALS
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Applied and EURASIAN is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and EURASIAN MINERALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EURASIAN MINERALS 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 EURASIAN MINERALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EURASIAN MINERALS has no effect on the direction of Applied Materials i.e., Applied Materials and EURASIAN MINERALS go up and down completely randomly.
Pair Corralation between Applied Materials and EURASIAN MINERALS
Assuming the 90 days horizon Applied Materials is expected to generate 2.23 times more return on investment than EURASIAN MINERALS. However, Applied Materials is 2.23 times more volatile than EURASIAN MINERALS. It trades about 0.1 of its potential returns per unit of risk. EURASIAN MINERALS is currently generating about -0.02 per unit of risk. If you would invest 15,828 in Applied Materials on September 20, 2024 and sell it today you would earn a total of 772.00 from holding Applied Materials or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Applied Materials vs. EURASIAN MINERALS
Performance |
| Timeline |
| Applied Materials |
| EURASIAN MINERALS |
Applied Materials and EURASIAN MINERALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and EURASIAN MINERALS
The main advantage of trading using opposite Applied Materials and EURASIAN MINERALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, EURASIAN MINERALS 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 EURASIAN MINERALS will offset losses from the drop in EURASIAN MINERALS's long position.| Applied Materials vs. Tokyo Electron Limited | Applied Materials vs. Superior Plus Corp | Applied Materials vs. SIVERS SEMICONDUCTORS AB | Applied Materials vs. Norsk Hydro ASA |
| EURASIAN MINERALS vs. PARKEN Sport Entertainment | EURASIAN MINERALS vs. Eagle Materials | EURASIAN MINERALS vs. Applied Materials | EURASIAN MINERALS vs. THRACE PLASTICS |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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