Correlation Between APPLIED MATERIALS and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and IMPERIAL TOBACCO , you can compare the effects of market volatilities on APPLIED MATERIALS and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and IMPERIAL TOBACCO.
Diversification Opportunities for APPLIED MATERIALS and IMPERIAL TOBACCO
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between APPLIED and IMPERIAL is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and IMPERIAL TOBACCO
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to under-perform the IMPERIAL TOBACCO. In addition to that, APPLIED MATERIALS is 2.66 times more volatile than IMPERIAL TOBACCO . It trades about -0.03 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.22 per unit of volatility. If you would invest 2,260 in IMPERIAL TOBACCO on September 5, 2024 and sell it today you would earn a total of 795.00 from holding IMPERIAL TOBACCO or generate 35.18% 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. IMPERIAL TOBACCO
Performance |
| Timeline |
| APPLIED MATERIALS |
| IMPERIAL TOBACCO |
APPLIED MATERIALS and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and IMPERIAL TOBACCO
The main advantage of trading using opposite APPLIED MATERIALS and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| APPLIED MATERIALS vs. JSC Halyk bank | APPLIED MATERIALS vs. REVO INSURANCE SPA | APPLIED MATERIALS vs. MARKET VECTR RETAIL | APPLIED MATERIALS vs. PICKN PAY STORES |
| IMPERIAL TOBACCO vs. GOODYEAR T RUBBER | IMPERIAL TOBACCO vs. Materialise NV | IMPERIAL TOBACCO vs. APPLIED MATERIALS | IMPERIAL TOBACCO vs. China Resources Beer |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Stocks Directory Find actively traded stocks across global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |