Correlation Between Creo Medical and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Creo Medical 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 Creo Medical and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Creo Medical Group and Applied Materials, you can compare the effects of market volatilities on Creo Medical 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 Creo Medical with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Creo Medical and Applied Materials.
Diversification Opportunities for Creo Medical and Applied Materials
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Creo and Applied is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Creo Medical Group and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Creo Medical 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 Creo Medical Group 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 Creo Medical i.e., Creo Medical and Applied Materials go up and down completely randomly.
Pair Corralation between Creo Medical and Applied Materials
Assuming the 90 days trading horizon Creo Medical Group is expected to generate 1.24 times more return on investment than Applied Materials. However, Creo Medical is 1.24 times more volatile than Applied Materials. It trades about 0.01 of its potential returns per unit of risk. Applied Materials is currently generating about 0.01 per unit of risk. If you would invest 1,825 in Creo Medical Group on November 6, 2024 and sell it today you would lose (25.00) from holding Creo Medical Group or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Creo Medical Group vs. Applied Materials
Performance |
| Timeline |
| Creo Medical Group |
| Applied Materials |
Creo Medical and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Creo Medical and Applied Materials
The main advantage of trading using opposite Creo Medical and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Creo Medical 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.| Creo Medical vs. Zoom Video Communications | Creo Medical vs. Sealed Air Corp | Creo Medical vs. Cairo Communication SpA | Creo Medical vs. Finnair Oyj |
| Applied Materials vs. MTI Wireless Edge | Applied Materials vs. AcadeMedia AB | Applied Materials vs. Live Nation Entertainment | Applied Materials vs. Wyndham Hotels Resorts |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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