Correlation Between APPLIED MATERIALS and NURAN WIRELESS
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and NURAN WIRELESS 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 NURAN WIRELESS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and NURAN WIRELESS INC, you can compare the effects of market volatilities on APPLIED MATERIALS and NURAN WIRELESS 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 NURAN WIRELESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and NURAN WIRELESS.
Diversification Opportunities for APPLIED MATERIALS and NURAN WIRELESS
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between APPLIED and NURAN is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and NURAN WIRELESS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NURAN WIRELESS INC 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 NURAN WIRELESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NURAN WIRELESS INC has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and NURAN WIRELESS go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and NURAN WIRELESS
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 0.66 times more return on investment than NURAN WIRELESS. However, APPLIED MATERIALS is 1.52 times less risky than NURAN WIRELESS. It trades about -0.11 of its potential returns per unit of risk. NURAN WIRELESS INC is currently generating about -0.2 per unit of risk. If you would invest 17,622 in APPLIED MATERIALS on September 12, 2024 and sell it today you would lose (1,240) from holding APPLIED MATERIALS or give up 7.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. NURAN WIRELESS INC
Performance |
| Timeline |
| APPLIED MATERIALS |
| NURAN WIRELESS INC |
APPLIED MATERIALS and NURAN WIRELESS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and NURAN WIRELESS
The main advantage of trading using opposite APPLIED MATERIALS and NURAN WIRELESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, NURAN WIRELESS 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 NURAN WIRELESS will offset losses from the drop in NURAN WIRELESS's long position.| APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc |
| NURAN WIRELESS vs. Cisco Systems | NURAN WIRELESS vs. Nokia | NURAN WIRELESS vs. Hewlett Packard Enterprise | NURAN WIRELESS vs. Superior Plus Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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