Correlation Between APPLIED MATERIALS and Kellogg
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and Kellogg 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 Kellogg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Kellogg Company, you can compare the effects of market volatilities on APPLIED MATERIALS and Kellogg 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 Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Kellogg.
Diversification Opportunities for APPLIED MATERIALS and Kellogg
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between APPLIED and Kellogg is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Kellogg Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellogg Company 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 Kellogg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellogg Company has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and Kellogg go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and Kellogg
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.66 times more return on investment than Kellogg. However, APPLIED MATERIALS is 1.66 times more volatile than Kellogg Company. It trades about 0.05 of its potential returns per unit of risk. Kellogg Company is currently generating about 0.05 per unit of risk. If you would invest 10,436 in APPLIED MATERIALS on November 1, 2024 and sell it today you would earn a total of 6,354 from holding APPLIED MATERIALS or generate 60.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. Kellogg Company
Performance |
| Timeline |
| APPLIED MATERIALS |
| Kellogg Company |
APPLIED MATERIALS and Kellogg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and Kellogg
The main advantage of trading using opposite APPLIED MATERIALS and Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, Kellogg 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 Kellogg will offset losses from the drop in Kellogg's long position.| APPLIED MATERIALS vs. Charter Communications | APPLIED MATERIALS vs. AECOM TECHNOLOGY | APPLIED MATERIALS vs. SOGECLAIR SA INH | APPLIED MATERIALS vs. GMO Internet |
| Kellogg vs. MagnaChip Semiconductor Corp | Kellogg vs. Mitsubishi Materials | Kellogg vs. EAGLE MATERIALS | Kellogg vs. APPLIED MATERIALS |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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