Correlation Between CAREER EDUCATION and Applied Materials
Can any of the company-specific risk be diversified away by investing in both CAREER EDUCATION and Applied Materials 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 CAREER EDUCATION and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAREER EDUCATION and Applied Materials, you can compare the effects of market volatilities on CAREER EDUCATION and Applied Materials 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 CAREER EDUCATION with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAREER EDUCATION and Applied Materials.
Diversification Opportunities for CAREER EDUCATION and Applied Materials
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CAREER and Applied is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CAREER EDUCATION and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and CAREER EDUCATION 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 CAREER EDUCATION are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of CAREER EDUCATION i.e., CAREER EDUCATION and Applied Materials go up and down completely randomly.
Pair Corralation between CAREER EDUCATION and Applied Materials
Assuming the 90 days trading horizon CAREER EDUCATION is expected to generate 1.04 times less return on investment than Applied Materials. But when comparing it to its historical volatility, CAREER EDUCATION is 2.47 times less risky than Applied Materials. It trades about 0.23 of its potential returns per unit of risk. Applied Materials is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 15,952 in Applied Materials on November 1, 2024 and sell it today you would earn a total of 904.00 from holding Applied Materials or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAREER EDUCATION vs. Applied Materials
Performance |
| Timeline |
| CAREER EDUCATION |
| Applied Materials |
CAREER EDUCATION and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAREER EDUCATION and Applied Materials
The main advantage of trading using opposite CAREER EDUCATION and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAREER EDUCATION position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| CAREER EDUCATION vs. Apple Inc | CAREER EDUCATION vs. Apple Inc | CAREER EDUCATION vs. Apple Inc | CAREER EDUCATION vs. Apple Inc |
| Applied Materials vs. GWILLI FOOD | Applied Materials vs. Siemens Healthineers AG | Applied Materials vs. OPKO HEALTH | Applied Materials vs. Cardinal Health |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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