Correlation Between Applied Materials and Yokohama Rubber
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Yokohama Rubber 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 Yokohama Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and The Yokohama Rubber, you can compare the effects of market volatilities on Applied Materials and Yokohama Rubber 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 Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Yokohama Rubber.
Diversification Opportunities for Applied Materials and Yokohama Rubber
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Applied and Yokohama is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber 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 Yokohama Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokohama Rubber has no effect on the direction of Applied Materials i.e., Applied Materials and Yokohama Rubber go up and down completely randomly.
Pair Corralation between Applied Materials and Yokohama Rubber
Assuming the 90 days horizon Applied Materials is expected to under-perform the Yokohama Rubber. In addition to that, Applied Materials is 1.49 times more volatile than The Yokohama Rubber. It trades about -0.07 of its total potential returns per unit of risk. The Yokohama Rubber is currently generating about 0.03 per unit of volatility. If you would invest 1,880 in The Yokohama Rubber on August 31, 2024 and sell it today you would earn a total of 20.00 from holding The Yokohama Rubber or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. The Yokohama Rubber
Performance |
| Timeline |
| Applied Materials |
| Yokohama Rubber |
Applied Materials and Yokohama Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Yokohama Rubber
The main advantage of trading using opposite Applied Materials and Yokohama Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Yokohama Rubber 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 Yokohama Rubber will offset losses from the drop in Yokohama Rubber's long position.| Applied Materials vs. ASML Holding NV | Applied Materials vs. Superior Plus Corp | Applied Materials vs. NMI Holdings | Applied Materials vs. Origin Agritech |
| Yokohama Rubber vs. UNIVMUSIC GRPADR050 | Yokohama Rubber vs. Treasury Wine Estates | Yokohama Rubber vs. PARKEN Sport Entertainment | Yokohama Rubber vs. Flutter Entertainment PLC |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |