Correlation Between Applied Materials and VIVENDI UNSPONARD
Can any of the company-specific risk be diversified away by investing in both Applied Materials and VIVENDI UNSPONARD 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 VIVENDI UNSPONARD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and VIVENDI UNSPONARD EO, you can compare the effects of market volatilities on Applied Materials and VIVENDI UNSPONARD 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 VIVENDI UNSPONARD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and VIVENDI UNSPONARD.
Diversification Opportunities for Applied Materials and VIVENDI UNSPONARD
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Applied and VIVENDI is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and VIVENDI UNSPONARD EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIVENDI UNSPONARD 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 VIVENDI UNSPONARD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIVENDI UNSPONARD has no effect on the direction of Applied Materials i.e., Applied Materials and VIVENDI UNSPONARD go up and down completely randomly.
Pair Corralation between Applied Materials and VIVENDI UNSPONARD
Assuming the 90 days horizon Applied Materials is expected to generate 0.2 times more return on investment than VIVENDI UNSPONARD. However, Applied Materials is 5.08 times less risky than VIVENDI UNSPONARD. It trades about -0.33 of its potential returns per unit of risk. VIVENDI UNSPONARD EO is currently generating about -0.21 per unit of risk. If you would invest 17,559 in Applied Materials on December 8, 2024 and sell it today you would lose (3,149) from holding Applied Materials or give up 17.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. VIVENDI UNSPONARD EO
Performance |
| Timeline |
| Applied Materials |
| VIVENDI UNSPONARD |
Applied Materials and VIVENDI UNSPONARD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and VIVENDI UNSPONARD
The main advantage of trading using opposite Applied Materials and VIVENDI UNSPONARD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, VIVENDI UNSPONARD 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 VIVENDI UNSPONARD will offset losses from the drop in VIVENDI UNSPONARD's long position.| Applied Materials vs. United Rentals | ||
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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