Correlation Between APPLIED MATERIALS and CARSALES
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and CARSALES 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 CARSALES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and CARSALESCOM, you can compare the effects of market volatilities on APPLIED MATERIALS and CARSALES 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 CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and CARSALES.
Diversification Opportunities for APPLIED MATERIALS and CARSALES
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between APPLIED and CARSALES is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and CARSALES go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and CARSALES
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.17 times less return on investment than CARSALES. In addition to that, APPLIED MATERIALS is 1.52 times more volatile than CARSALESCOM. It trades about 0.05 of its total potential returns per unit of risk. CARSALESCOM is currently generating about 0.1 per unit of volatility. If you would invest 1,292 in CARSALESCOM on September 3, 2024 and sell it today you would earn a total of 1,268 from holding CARSALESCOM or generate 98.14% 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. CARSALESCOM
Performance |
| Timeline |
| APPLIED MATERIALS |
| CARSALESCOM |
APPLIED MATERIALS and CARSALES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and CARSALES
The main advantage of trading using opposite APPLIED MATERIALS and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, CARSALES 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 CARSALES will offset losses from the drop in CARSALES'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 |
| CARSALES vs. COMBA TELECOM SYST | CARSALES vs. SENECA FOODS A | CARSALES vs. Entravision Communications | CARSALES vs. JJ SNACK FOODS |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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