Correlation Between APPLIED MATERIALS and VIVA WINE
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and VIVA WINE 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 VIVA WINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and VIVA WINE GROUP, you can compare the effects of market volatilities on APPLIED MATERIALS and VIVA WINE 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 VIVA WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and VIVA WINE.
Diversification Opportunities for APPLIED MATERIALS and VIVA WINE
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between APPLIED and VIVA is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and VIVA WINE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIVA WINE GROUP 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 VIVA WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIVA WINE GROUP has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and VIVA WINE go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and VIVA WINE
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.81 times more return on investment than VIVA WINE. However, APPLIED MATERIALS is 1.81 times more volatile than VIVA WINE GROUP. It trades about 0.01 of its potential returns per unit of risk. VIVA WINE GROUP is currently generating about -0.23 per unit of risk. If you would invest 16,605 in APPLIED MATERIALS on September 1, 2024 and sell it today you would lose (73.00) from holding APPLIED MATERIALS or give up 0.44% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
APPLIED MATERIALS vs. VIVA WINE GROUP
Performance |
Timeline |
APPLIED MATERIALS |
VIVA WINE GROUP |
APPLIED MATERIALS and VIVA WINE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with APPLIED MATERIALS and VIVA WINE
The main advantage of trading using opposite APPLIED MATERIALS and VIVA WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, VIVA WINE 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 VIVA WINE will offset losses from the drop in VIVA WINE'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 |
VIVA WINE vs. APPLIED MATERIALS | VIVA WINE vs. United Airlines Holdings | VIVA WINE vs. Nok Airlines PCL | VIVA WINE vs. Goodyear Tire Rubber |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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