Correlation Between APPLIED MATERIALS and Chalice Mining
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and Chalice Mining 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 Chalice Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Chalice Mining Limited, you can compare the effects of market volatilities on APPLIED MATERIALS and Chalice Mining 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 Chalice Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Chalice Mining.
Diversification Opportunities for APPLIED MATERIALS and Chalice Mining
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between APPLIED and Chalice is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Chalice Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Mining 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 Chalice Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Mining has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and Chalice Mining go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and Chalice Mining
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 0.52 times more return on investment than Chalice Mining. However, APPLIED MATERIALS is 1.91 times less risky than Chalice Mining. It trades about -0.14 of its potential returns per unit of risk. Chalice Mining Limited is currently generating about -0.27 per unit of risk. If you would invest 16,802 in APPLIED MATERIALS on September 26, 2024 and sell it today you would lose (976.00) from holding APPLIED MATERIALS or give up 5.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. Chalice Mining Limited
Performance |
| Timeline |
| APPLIED MATERIALS |
| Chalice Mining |
APPLIED MATERIALS and Chalice Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and Chalice Mining
The main advantage of trading using opposite APPLIED MATERIALS and Chalice Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, Chalice Mining 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 Chalice Mining will offset losses from the drop in Chalice Mining's long position.| APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Microsoft | APPLIED MATERIALS vs. Microsoft |
| Chalice Mining vs. ZIJIN MINH UNSPADR20 | Chalice Mining vs. Newmont | Chalice Mining vs. Barrick Gold | Chalice Mining vs. Franco Nevada |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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