Correlation Between APPLIED MATERIALS and Lendlease
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and Lendlease 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 Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Lendlease Group, you can compare the effects of market volatilities on APPLIED MATERIALS and Lendlease 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 Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Lendlease.
Diversification Opportunities for APPLIED MATERIALS and Lendlease
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between APPLIED and Lendlease is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease 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 Lendlease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendlease Group has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and Lendlease go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and Lendlease
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 2.48 times more return on investment than Lendlease. However, APPLIED MATERIALS is 2.48 times more volatile than Lendlease Group. It trades about 0.22 of its potential returns per unit of risk. Lendlease Group is currently generating about 0.09 per unit of risk. If you would invest 15,976 in APPLIED MATERIALS on October 28, 2024 and sell it today you would earn a total of 1,968 from holding APPLIED MATERIALS or generate 12.32% 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. Lendlease Group
Performance |
| Timeline |
| APPLIED MATERIALS |
| Lendlease Group |
APPLIED MATERIALS and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and Lendlease
The main advantage of trading using opposite APPLIED MATERIALS and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, Lendlease 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 Lendlease will offset losses from the drop in Lendlease's long position.| APPLIED MATERIALS vs. Heidelberg Materials AG | APPLIED MATERIALS vs. Meli Hotels International | APPLIED MATERIALS vs. Applied Materials | APPLIED MATERIALS vs. InterContinental Hotels Group |
| Lendlease vs. Citic Telecom International | Lendlease vs. TELECOM ITALIA | Lendlease vs. SK TELECOM TDADR | Lendlease vs. Chunghwa Telecom Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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