Correlation Between APPLIED MATERIALS and Zoetis
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and Zoetis 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 Zoetis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Zoetis Inc, you can compare the effects of market volatilities on APPLIED MATERIALS and Zoetis 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 Zoetis. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Zoetis.
Diversification Opportunities for APPLIED MATERIALS and Zoetis
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between APPLIED and Zoetis is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Zoetis Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoetis Inc 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 Zoetis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoetis Inc has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and Zoetis go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and Zoetis
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.98 times more return on investment than Zoetis. However, APPLIED MATERIALS is 1.98 times more volatile than Zoetis Inc. It trades about 0.03 of its potential returns per unit of risk. Zoetis Inc is currently generating about 0.03 per unit of risk. If you would invest 16,702 in APPLIED MATERIALS on November 3, 2024 and sell it today you would earn a total of 670.00 from holding APPLIED MATERIALS or generate 4.01% 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. Zoetis Inc
Performance |
| Timeline |
| APPLIED MATERIALS |
| Zoetis Inc |
APPLIED MATERIALS and Zoetis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and Zoetis
The main advantage of trading using opposite APPLIED MATERIALS and Zoetis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, Zoetis 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 Zoetis will offset losses from the drop in Zoetis' long position.| APPLIED MATERIALS vs. Luckin Coffee | APPLIED MATERIALS vs. IDP EDUCATION LTD | APPLIED MATERIALS vs. Highlight Communications AG | APPLIED MATERIALS vs. CHINA EDUCATION GROUP |
| Zoetis vs. Nexstar Media Group | Zoetis vs. ADDUS HOMECARE | Zoetis vs. American Homes 4 | Zoetis vs. ATRESMEDIA |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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