Correlation Between APPLIED MATERIALS and Apple
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Apple Inc, you can compare the effects of market volatilities on APPLIED MATERIALS and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Apple.
Diversification Opportunities for APPLIED MATERIALS and Apple
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between APPLIED and Apple is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and Apple go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and Apple
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 30.78 times less return on investment than Apple. In addition to that, APPLIED MATERIALS is 2.93 times more volatile than Apple Inc. It trades about 0.01 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.5 per unit of volatility. If you would invest 20,331 in Apple Inc on September 1, 2024 and sell it today you would earn a total of 2,104 from holding Apple Inc or generate 10.35% 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. Apple Inc
Performance |
| Timeline |
| APPLIED MATERIALS |
| Apple Inc |
APPLIED MATERIALS and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and Apple
The main advantage of trading using opposite APPLIED MATERIALS and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple'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 |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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