Correlation Between Applied Materials and Allianz SE
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Allianz SE 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 Allianz SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Allianz SE, you can compare the effects of market volatilities on Applied Materials and Allianz SE 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 Allianz SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Allianz SE.
Diversification Opportunities for Applied Materials and Allianz SE
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Applied and Allianz is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Allianz SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE 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 Allianz SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz SE has no effect on the direction of Applied Materials i.e., Applied Materials and Allianz SE go up and down completely randomly.
Pair Corralation between Applied Materials and Allianz SE
Assuming the 90 days horizon Applied Materials is expected to under-perform the Allianz SE. In addition to that, Applied Materials is 2.96 times more volatile than Allianz SE. It trades about -0.01 of its total potential returns per unit of risk. Allianz SE is currently generating about 0.09 per unit of volatility. If you would invest 25,516 in Allianz SE on September 3, 2024 and sell it today you would earn a total of 3,684 from holding Allianz SE or generate 14.44% 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. Allianz SE
Performance |
| Timeline |
| Applied Materials |
| Allianz SE |
Applied Materials and Allianz SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Allianz SE
The main advantage of trading using opposite Applied Materials and Allianz SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Allianz SE 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 Allianz SE will offset losses from the drop in Allianz SE's long position.| Applied Materials vs. ASML HOLDING NY | Applied Materials vs. ASML Holding NV | Applied Materials vs. ASML Holding NV | Applied Materials vs. Lam Research |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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