Correlation Between APPLIED MATERIALS and TRAINLINE PLC
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and TRAINLINE PLC 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 TRAINLINE PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and TRAINLINE PLC LS, you can compare the effects of market volatilities on APPLIED MATERIALS and TRAINLINE PLC 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 TRAINLINE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and TRAINLINE PLC.
Diversification Opportunities for APPLIED MATERIALS and TRAINLINE PLC
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between APPLIED and TRAINLINE is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and TRAINLINE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAINLINE PLC LS 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 TRAINLINE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAINLINE PLC LS has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and TRAINLINE PLC go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and TRAINLINE PLC
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 28.57 times less return on investment than TRAINLINE PLC. But when comparing it to its historical volatility, APPLIED MATERIALS is 1.18 times less risky than TRAINLINE PLC. It trades about 0.01 of its potential returns per unit of risk. TRAINLINE PLC LS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 444.00 in TRAINLINE PLC LS on September 1, 2024 and sell it today you would earn a total of 38.00 from holding TRAINLINE PLC LS or generate 8.56% 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. TRAINLINE PLC LS
Performance |
| Timeline |
| APPLIED MATERIALS |
| TRAINLINE PLC LS |
APPLIED MATERIALS and TRAINLINE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and TRAINLINE PLC
The main advantage of trading using opposite APPLIED MATERIALS and TRAINLINE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, TRAINLINE PLC 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 TRAINLINE PLC will offset losses from the drop in TRAINLINE PLC's long position.| APPLIED MATERIALS vs. QBE Insurance Group | APPLIED MATERIALS vs. Selective Insurance Group | APPLIED MATERIALS vs. Singapore Reinsurance | APPLIED MATERIALS vs. United Natural Foods |
| TRAINLINE PLC vs. Mitsubishi Gas Chemical | TRAINLINE PLC vs. Nordic Semiconductor ASA | TRAINLINE PLC vs. Tower Semiconductor | TRAINLINE PLC vs. SEKISUI CHEMICAL |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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