Correlation Between APPLIED MATERIALS and Waste Management
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and Waste Management 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 Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Waste Management, you can compare the effects of market volatilities on APPLIED MATERIALS and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Waste Management.
Diversification Opportunities for APPLIED MATERIALS and Waste Management
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between APPLIED and Waste is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and Waste Management go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and Waste Management
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to under-perform the Waste Management. In addition to that, APPLIED MATERIALS is 1.61 times more volatile than Waste Management. It trades about -0.05 of its total potential returns per unit of risk. Waste Management is currently generating about 0.32 per unit of volatility. If you would invest 19,202 in Waste Management on August 26, 2024 and sell it today you would earn a total of 2,268 from holding Waste Management or generate 11.81% 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. Waste Management
Performance |
| Timeline |
| APPLIED MATERIALS |
| Waste Management |
APPLIED MATERIALS and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and Waste Management
The main advantage of trading using opposite APPLIED MATERIALS and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| APPLIED MATERIALS vs. Vastned Retail NV | APPLIED MATERIALS vs. Grupo Carso SAB | APPLIED MATERIALS vs. Salesforce | APPLIED MATERIALS vs. SALESFORCE INC CDR |
| Waste Management vs. APPLIED MATERIALS | Waste Management vs. Vulcan Materials | Waste Management vs. Sumitomo Rubber Industries | Waste Management vs. VULCAN 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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