Correlation Between Applied Materials and Invion
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Invion 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 Invion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Invion Limited, you can compare the effects of market volatilities on Applied Materials and Invion 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 Invion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Invion.
Diversification Opportunities for Applied Materials and Invion
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Applied and Invion is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Invion Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invion Limited 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 Invion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invion Limited has no effect on the direction of Applied Materials i.e., Applied Materials and Invion go up and down completely randomly.
Pair Corralation between Applied Materials and Invion
Assuming the 90 days horizon Applied Materials is expected to generate 91.97 times less return on investment than Invion. But when comparing it to its historical volatility, Applied Materials is 36.82 times less risky than Invion. It trades about 0.05 of its potential returns per unit of risk. Invion Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Invion Limited on October 27, 2024 and sell it today you would lose (22.00) from holding Invion Limited or give up 62.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. Invion Limited
Performance |
| Timeline |
| Applied Materials |
| Invion Limited |
Applied Materials and Invion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Invion
The main advantage of trading using opposite Applied Materials and Invion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Invion 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 Invion will offset losses from the drop in Invion's long position.| Applied Materials vs. GAMING FAC SA | Applied Materials vs. GEAR4MUSIC LS 10 | Applied Materials vs. Boyd Gaming | Applied Materials vs. UNIVMUSIC GRPADR050 |
| Invion vs. CONTAGIOUS GAMING INC | Invion vs. DETALION GAMES SA | Invion vs. FRACTAL GAMING GROUP | Invion vs. Endeavour Mining PLC |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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