Correlation Between APPLIED MATERIALS and Radian
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and Radian 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 Radian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Radian Group, you can compare the effects of market volatilities on APPLIED MATERIALS and Radian 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 Radian. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Radian.
Diversification Opportunities for APPLIED MATERIALS and Radian
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between APPLIED and Radian is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Radian Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radian 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 Radian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radian Group has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and Radian go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and Radian
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.54 times more return on investment than Radian. However, APPLIED MATERIALS is 1.54 times more volatile than Radian Group. It trades about 0.46 of its potential returns per unit of risk. Radian Group is currently generating about 0.17 per unit of risk. If you would invest 15,554 in APPLIED MATERIALS on October 20, 2024 and sell it today you would earn a total of 3,246 from holding APPLIED MATERIALS or generate 20.87% 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. Radian Group
Performance |
| Timeline |
| APPLIED MATERIALS |
| Radian Group |
APPLIED MATERIALS and Radian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and Radian
The main advantage of trading using opposite APPLIED MATERIALS and Radian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, Radian 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 Radian will offset losses from the drop in Radian's long position.| APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc |
| Radian vs. Sumitomo Rubber Industries | Radian vs. APPLIED MATERIALS | Radian vs. VIENNA INSURANCE GR | Radian 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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