Correlation Between Applied Materials and Eskay Mining
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Eskay Mining 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 Eskay Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Eskay Mining Corp, you can compare the effects of market volatilities on Applied Materials and Eskay Mining 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 Eskay Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Eskay Mining.
Diversification Opportunities for Applied Materials and Eskay Mining
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Applied and Eskay is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Eskay Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eskay Mining Corp 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 Eskay Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eskay Mining Corp has no effect on the direction of Applied Materials i.e., Applied Materials and Eskay Mining go up and down completely randomly.
Pair Corralation between Applied Materials and Eskay Mining
Assuming the 90 days horizon Applied Materials is expected to under-perform the Eskay Mining. But the stock apears to be less risky and, when comparing its historical volatility, Applied Materials is 2.23 times less risky than Eskay Mining. The stock trades about -0.05 of its potential returns per unit of risk. The Eskay Mining Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Eskay Mining Corp on October 30, 2024 and sell it today you would lose (5.00) from holding Eskay Mining Corp or give up 29.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. Eskay Mining Corp
Performance |
| Timeline |
| Applied Materials |
| Eskay Mining Corp |
Applied Materials and Eskay Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Eskay Mining
The main advantage of trading using opposite Applied Materials and Eskay Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Eskay Mining 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 Eskay Mining will offset losses from the drop in Eskay Mining's long position.| Applied Materials vs. ASML Holding NV | Applied Materials vs. KLA Corporation | Applied Materials vs. Teradyne | Applied Materials vs. ASM International NV |
| Eskay Mining vs. Zoom Video Communications | Eskay Mining vs. GEELY AUTOMOBILE | Eskay Mining vs. OPERA SOFTWARE | Eskay Mining vs. Coffee Holding Co |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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