Correlation Between Applied Materials and NTG Nordic
Can any of the company-specific risk be diversified away by investing in both Applied Materials and NTG Nordic 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 NTG Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and NTG Nordic Transport, you can compare the effects of market volatilities on Applied Materials and NTG Nordic 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 NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and NTG Nordic.
Diversification Opportunities for Applied Materials and NTG Nordic
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Applied and NTG is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport 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 NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Applied Materials i.e., Applied Materials and NTG Nordic go up and down completely randomly.
Pair Corralation between Applied Materials and NTG Nordic
Assuming the 90 days horizon Applied Materials is expected to generate 1.54 times more return on investment than NTG Nordic. However, Applied Materials is 1.54 times more volatile than NTG Nordic Transport. It trades about 0.22 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.24 per unit of risk. If you would invest 16,004 in Applied Materials on October 29, 2024 and sell it today you would earn a total of 1,808 from holding Applied Materials or generate 11.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. NTG Nordic Transport
Performance |
| Timeline |
| Applied Materials |
| NTG Nordic Transport |
Applied Materials and NTG Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and NTG Nordic
The main advantage of trading using opposite Applied Materials and NTG Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, NTG Nordic 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 NTG Nordic will offset losses from the drop in NTG Nordic's long position.| Applied Materials vs. Tencent Music Entertainment | Applied Materials vs. Prosiebensat 1 Media | Applied Materials vs. Fuji Media Holdings | Applied Materials vs. PENN Entertainment |
| NTG Nordic vs. PLAYTIKA HOLDING DL 01 | NTG Nordic vs. Verizon Communications | NTG Nordic vs. COMBA TELECOM SYST | NTG Nordic vs. Playa Hotels Resorts |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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