Correlation Between APPLIED MATERIALS and EMBARK EDUCATION
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and EMBARK EDUCATION 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 EMBARK EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and EMBARK EDUCATION LTD, you can compare the effects of market volatilities on APPLIED MATERIALS and EMBARK EDUCATION 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 EMBARK EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and EMBARK EDUCATION.
Diversification Opportunities for APPLIED MATERIALS and EMBARK EDUCATION
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between APPLIED and EMBARK is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and EMBARK EDUCATION LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMBARK EDUCATION LTD 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 EMBARK EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMBARK EDUCATION LTD has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and EMBARK EDUCATION go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and EMBARK EDUCATION
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to under-perform the EMBARK EDUCATION. In addition to that, APPLIED MATERIALS is 5.36 times more volatile than EMBARK EDUCATION LTD. It trades about -0.07 of its total potential returns per unit of risk. EMBARK EDUCATION LTD is currently generating about 0.15 per unit of volatility. If you would invest 30.00 in EMBARK EDUCATION LTD on August 30, 2024 and sell it today you would earn a total of 1.00 from holding EMBARK EDUCATION LTD or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
APPLIED MATERIALS vs. EMBARK EDUCATION LTD
Performance |
| Timeline |
| APPLIED MATERIALS |
| EMBARK EDUCATION LTD |
APPLIED MATERIALS and EMBARK EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and EMBARK EDUCATION
The main advantage of trading using opposite APPLIED MATERIALS and EMBARK EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, EMBARK EDUCATION 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 EMBARK EDUCATION will offset losses from the drop in EMBARK EDUCATION's long position.| APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Superior Plus Corp | APPLIED MATERIALS vs. SIVERS SEMICONDUCTORS AB |
| EMBARK EDUCATION vs. Sqs Software Quality | EMBARK EDUCATION vs. EEDUCATION ALBERT AB | EMBARK EDUCATION vs. ATOSS SOFTWARE | EMBARK EDUCATION vs. Lion One Metals |
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.
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