Correlation Between APPLIED MATERIALS and SEIKO EPSON
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and SEIKO EPSON 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 SEIKO EPSON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and SEIKO EPSON PADR, you can compare the effects of market volatilities on APPLIED MATERIALS and SEIKO EPSON 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 SEIKO EPSON. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and SEIKO EPSON.
Diversification Opportunities for APPLIED MATERIALS and SEIKO EPSON
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between APPLIED and SEIKO is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and SEIKO EPSON PADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEIKO EPSON PADR 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 SEIKO EPSON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEIKO EPSON PADR has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and SEIKO EPSON go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and SEIKO EPSON
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.07 times less return on investment than SEIKO EPSON. In addition to that, APPLIED MATERIALS is 1.33 times more volatile than SEIKO EPSON PADR. It trades about 0.04 of its total potential returns per unit of risk. SEIKO EPSON PADR is currently generating about 0.06 per unit of volatility. If you would invest 641.00 in SEIKO EPSON PADR on September 4, 2024 and sell it today you would earn a total of 199.00 from holding SEIKO EPSON PADR or generate 31.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. SEIKO EPSON PADR
Performance |
| Timeline |
| APPLIED MATERIALS |
| SEIKO EPSON PADR |
APPLIED MATERIALS and SEIKO EPSON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and SEIKO EPSON
The main advantage of trading using opposite APPLIED MATERIALS and SEIKO EPSON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, SEIKO EPSON 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 SEIKO EPSON will offset losses from the drop in SEIKO EPSON's long position.| APPLIED MATERIALS vs. TOTAL GABON | APPLIED MATERIALS vs. Walgreens Boots Alliance | APPLIED MATERIALS vs. Peak Resources Limited |
| SEIKO EPSON vs. Tower One Wireless | SEIKO EPSON vs. COMBA TELECOM SYST | SEIKO EPSON vs. Ribbon Communications | SEIKO EPSON vs. SK TELECOM TDADR |
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.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |