Correlation Between Applied Materials and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Fevertree Drinks 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 Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Fevertree Drinks PLC, you can compare the effects of market volatilities on Applied Materials and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Fevertree Drinks.
Diversification Opportunities for Applied Materials and Fevertree Drinks
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Applied and Fevertree is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of Applied Materials i.e., Applied Materials and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Applied Materials and Fevertree Drinks
Assuming the 90 days horizon Applied Materials is expected to generate 1.16 times more return on investment than Fevertree Drinks. However, Applied Materials is 1.16 times more volatile than Fevertree Drinks PLC. It trades about 0.19 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about -0.24 per unit of risk. If you would invest 16,090 in Applied Materials on October 18, 2024 and sell it today you would earn a total of 1,214 from holding Applied Materials or generate 7.55% 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. Fevertree Drinks PLC
Performance |
| Timeline |
| Applied Materials |
| Fevertree Drinks PLC |
Applied Materials and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Fevertree Drinks
The main advantage of trading using opposite Applied Materials and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| Applied Materials vs. MCEWEN MINING INC | Applied Materials vs. Stag Industrial | Applied Materials vs. US Physical Therapy | Applied Materials vs. YOOMA WELLNESS INC |
| Fevertree Drinks vs. Applied Materials | Fevertree Drinks vs. Synovus Financial Corp | Fevertree Drinks vs. REVO INSURANCE SPA | Fevertree Drinks vs. Commonwealth Bank of |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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