Correlation Between Computer and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both Computer 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 Computer and APPLIED MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Computer And Technologies and APPLIED MATERIALS, you can compare the effects of market volatilities on Computer 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 Computer with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer and APPLIED MATERIALS.
Diversification Opportunities for Computer and APPLIED MATERIALS
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Computer and APPLIED is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Computer And Technologies and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS and Computer 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 Computer And Technologies 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 Computer i.e., Computer and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between Computer and APPLIED MATERIALS
Assuming the 90 days horizon Computer And Technologies is expected to generate 0.87 times more return on investment than APPLIED MATERIALS. However, Computer And Technologies is 1.15 times less risky than APPLIED MATERIALS. It trades about -0.08 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about -0.1 per unit of risk. If you would invest 20.00 in Computer And Technologies on September 13, 2024 and sell it today you would lose (1.00) from holding Computer And Technologies or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Computer And Technologies vs. APPLIED MATERIALS
Performance |
| Timeline |
| Computer And Technologies |
| APPLIED MATERIALS |
Computer and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Computer and APPLIED MATERIALS
The main advantage of trading using opposite Computer and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer 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's long position.| Computer vs. Cognizant Technology Solutions | Computer vs. Superior Plus Corp | Computer vs. SIVERS SEMICONDUCTORS AB | Computer vs. Norsk Hydro ASA |
| APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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