Correlation Between APPLIED MATERIALS and HP
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and HP 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 HP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and HP Inc, you can compare the effects of market volatilities on APPLIED MATERIALS and HP 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 HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and HP.
Diversification Opportunities for APPLIED MATERIALS and HP
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between APPLIED and HP is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP 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 HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and HP go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and HP
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.03 times more return on investment than HP. However, APPLIED MATERIALS is 1.03 times more volatile than HP Inc. It trades about 0.24 of its potential returns per unit of risk. HP Inc is currently generating about -0.04 per unit of risk. If you would invest 16,178 in APPLIED MATERIALS on October 13, 2024 and sell it today you would earn a total of 1,018 from holding APPLIED MATERIALS or generate 6.29% 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. HP Inc
Performance |
| Timeline |
| APPLIED MATERIALS |
| HP Inc |
APPLIED MATERIALS and HP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and HP
The main advantage of trading using opposite APPLIED MATERIALS and HP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, HP 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 HP will offset losses from the drop in HP's long position.| APPLIED MATERIALS vs. OFFICE DEPOT | APPLIED MATERIALS vs. Marie Brizard Wine | APPLIED MATERIALS vs. alstria office REIT AG | APPLIED MATERIALS vs. VIRGIN WINES UK |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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