Correlation Between APPLIED MATERIALS and DevEx Resources
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and DevEx Resources 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 DevEx Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and DevEx Resources Limited, you can compare the effects of market volatilities on APPLIED MATERIALS and DevEx Resources 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 DevEx Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and DevEx Resources.
Diversification Opportunities for APPLIED MATERIALS and DevEx Resources
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between APPLIED and DevEx is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and DevEx Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DevEx Resources 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 DevEx Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DevEx Resources has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and DevEx Resources go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and DevEx Resources
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 0.25 times more return on investment than DevEx Resources. However, APPLIED MATERIALS is 3.97 times less risky than DevEx Resources. It trades about 0.01 of its potential returns per unit of risk. DevEx Resources Limited is currently generating about -0.01 per unit of risk. If you would invest 16,532 in APPLIED MATERIALS on October 30, 2024 and sell it today you would lose (114.00) from holding APPLIED MATERIALS or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. DevEx Resources Limited
Performance |
| Timeline |
| APPLIED MATERIALS |
| DevEx Resources |
APPLIED MATERIALS and DevEx Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and DevEx Resources
The main advantage of trading using opposite APPLIED MATERIALS and DevEx Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, DevEx Resources 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 DevEx Resources will offset losses from the drop in DevEx Resources' long position.| APPLIED MATERIALS vs. TRI CHEMICAL LABORATINC | APPLIED MATERIALS vs. Quaker Chemical | APPLIED MATERIALS vs. SEKISUI CHEMICAL | APPLIED MATERIALS vs. KINGBOARD CHEMICAL |
| DevEx Resources vs. Methode Electronics | DevEx Resources vs. AOI Electronics Co | DevEx Resources vs. SOCKET MOBILE NEW | DevEx Resources vs. T MOBILE US |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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