Correlation Between APPLIED MATERIALS and WT OFFSHORE
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and WT OFFSHORE 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 WT OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and WT OFFSHORE, you can compare the effects of market volatilities on APPLIED MATERIALS and WT OFFSHORE 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 WT OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and WT OFFSHORE.
Diversification Opportunities for APPLIED MATERIALS and WT OFFSHORE
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between APPLIED and UWV is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and WT OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT OFFSHORE 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 WT OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT OFFSHORE has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and WT OFFSHORE go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and WT OFFSHORE
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 0.76 times more return on investment than WT OFFSHORE. However, APPLIED MATERIALS is 1.31 times less risky than WT OFFSHORE. It trades about 0.05 of its potential returns per unit of risk. WT OFFSHORE is currently generating about -0.05 per unit of risk. If you would invest 10,142 in APPLIED MATERIALS on September 2, 2024 and sell it today you would earn a total of 6,390 from holding APPLIED MATERIALS or generate 63.01% 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. WT OFFSHORE
Performance |
| Timeline |
| APPLIED MATERIALS |
| WT OFFSHORE |
APPLIED MATERIALS and WT OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and WT OFFSHORE
The main advantage of trading using opposite APPLIED MATERIALS and WT OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, WT OFFSHORE 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 WT OFFSHORE will offset losses from the drop in WT OFFSHORE's long position.| APPLIED MATERIALS vs. SBM OFFSHORE | APPLIED MATERIALS vs. Wizz Air Holdings | APPLIED MATERIALS vs. Selective Insurance Group | APPLIED MATERIALS vs. Japan Post Insurance |
| WT OFFSHORE vs. SK TELECOM TDADR | WT OFFSHORE vs. Rogers Communications | WT OFFSHORE vs. Highlight Communications AG | WT OFFSHORE vs. Singapore Telecommunications Limited |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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