Correlation Between APPLIED MATERIALS and UNITED UTILITIES
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and UNITED UTILITIES 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 UNITED UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and UNITED UTILITIES GR, you can compare the effects of market volatilities on APPLIED MATERIALS and UNITED UTILITIES 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 UNITED UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and UNITED UTILITIES.
Diversification Opportunities for APPLIED MATERIALS and UNITED UTILITIES
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between APPLIED and UNITED is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and UNITED UTILITIES GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED UTILITIES 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 UNITED UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED UTILITIES has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and UNITED UTILITIES go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and UNITED UTILITIES
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.75 times more return on investment than UNITED UTILITIES. However, APPLIED MATERIALS is 1.75 times more volatile than UNITED UTILITIES GR. It trades about 0.04 of its potential returns per unit of risk. UNITED UTILITIES GR is currently generating about 0.03 per unit of risk. If you would invest 13,616 in APPLIED MATERIALS on September 3, 2024 and sell it today you would earn a total of 2,906 from holding APPLIED MATERIALS or generate 21.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. UNITED UTILITIES GR
Performance |
| Timeline |
| APPLIED MATERIALS |
| UNITED UTILITIES |
APPLIED MATERIALS and UNITED UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and UNITED UTILITIES
The main advantage of trading using opposite APPLIED MATERIALS and UNITED UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, UNITED UTILITIES 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 UNITED UTILITIES will offset losses from the drop in UNITED UTILITIES's long position.| APPLIED MATERIALS vs. BJs Wholesale Club | APPLIED MATERIALS vs. United Internet AG | APPLIED MATERIALS vs. Entravision Communications | APPLIED MATERIALS vs. Cogent Communications Holdings |
| UNITED UTILITIES vs. ANTA SPORTS PRODUCT | UNITED UTILITIES vs. Transport International Holdings | UNITED UTILITIES vs. Sqs Software Quality | UNITED UTILITIES vs. PSI Software AG |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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