Correlation Between APPLIED MATERIALS and Shimano
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and Shimano 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 Shimano into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Shimano, you can compare the effects of market volatilities on APPLIED MATERIALS and Shimano 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 Shimano. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Shimano.
Diversification Opportunities for APPLIED MATERIALS and Shimano
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between APPLIED and Shimano is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Shimano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimano 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 Shimano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimano has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and Shimano go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and Shimano
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.33 times more return on investment than Shimano. However, APPLIED MATERIALS is 1.33 times more volatile than Shimano. It trades about 0.06 of its potential returns per unit of risk. Shimano is currently generating about -0.01 per unit of risk. If you would invest 8,864 in APPLIED MATERIALS on September 13, 2024 and sell it today you would earn a total of 7,412 from holding APPLIED MATERIALS or generate 83.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. Shimano
Performance |
| Timeline |
| APPLIED MATERIALS |
| Shimano |
APPLIED MATERIALS and Shimano Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and Shimano
The main advantage of trading using opposite APPLIED MATERIALS and Shimano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, Shimano 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 Shimano will offset losses from the drop in Shimano's long position.| APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc |
| Shimano vs. Meiko Electronics Co | Shimano vs. AOI Electronics Co | Shimano vs. APPLIED MATERIALS | Shimano vs. Plastic Omnium |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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