Correlation Between APPLIED MATERIALS and KAUFMAN ET
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and KAUFMAN ET 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 KAUFMAN ET into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and KAUFMAN ET BROAD, you can compare the effects of market volatilities on APPLIED MATERIALS and KAUFMAN ET 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 KAUFMAN ET. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and KAUFMAN ET.
Diversification Opportunities for APPLIED MATERIALS and KAUFMAN ET
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between APPLIED and KAUFMAN is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and KAUFMAN ET BROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAUFMAN ET BROAD 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 KAUFMAN ET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAUFMAN ET BROAD has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and KAUFMAN ET go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and KAUFMAN ET
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 2.02 times more return on investment than KAUFMAN ET. However, APPLIED MATERIALS is 2.02 times more volatile than KAUFMAN ET BROAD. It trades about -0.01 of its potential returns per unit of risk. KAUFMAN ET BROAD is currently generating about -0.31 per unit of risk. If you would invest 16,708 in APPLIED MATERIALS on September 3, 2024 and sell it today you would lose (176.00) from holding APPLIED MATERIALS or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. KAUFMAN ET BROAD
Performance |
| Timeline |
| APPLIED MATERIALS |
| KAUFMAN ET BROAD |
APPLIED MATERIALS and KAUFMAN ET Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and KAUFMAN ET
The main advantage of trading using opposite APPLIED MATERIALS and KAUFMAN ET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, KAUFMAN ET 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 KAUFMAN ET will offset losses from the drop in KAUFMAN ET's long position.| APPLIED MATERIALS vs. BJs Wholesale Club | APPLIED MATERIALS vs. United Internet AG | APPLIED MATERIALS vs. Entravision Communications | APPLIED MATERIALS vs. Cogent Communications Holdings |
| KAUFMAN ET vs. EHEALTH | KAUFMAN ET vs. APPLIED MATERIALS | KAUFMAN ET vs. Martin Marietta Materials | KAUFMAN ET vs. NEWELL RUBBERMAID |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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