Correlation Between GOLD ROAD and Applied Materials
Can any of the company-specific risk be diversified away by investing in both GOLD ROAD 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 GOLD ROAD and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOLD ROAD RES and Applied Materials, you can compare the effects of market volatilities on GOLD ROAD 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 GOLD ROAD with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and Applied Materials.
Diversification Opportunities for GOLD ROAD and Applied Materials
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GOLD and Applied is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and GOLD ROAD 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 GOLD ROAD RES 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 GOLD ROAD i.e., GOLD ROAD and Applied Materials go up and down completely randomly.
Pair Corralation between GOLD ROAD and Applied Materials
Assuming the 90 days trading horizon GOLD ROAD RES is expected to under-perform the Applied Materials. But the stock apears to be less risky and, when comparing its historical volatility, GOLD ROAD RES is 1.48 times less risky than Applied Materials. The stock trades about -0.09 of its potential returns per unit of risk. The Applied Materials is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 16,600 in Applied Materials on September 1, 2024 and sell it today you would earn a total of 278.00 from holding Applied Materials or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOLD ROAD RES vs. Applied Materials
Performance |
| Timeline |
| GOLD ROAD RES |
| Applied Materials |
GOLD ROAD and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOLD ROAD and Applied Materials
The main advantage of trading using opposite GOLD ROAD and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD 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.| GOLD ROAD vs. ACCSYS TECHPLC EO | GOLD ROAD vs. Align Technology | GOLD ROAD vs. AAC TECHNOLOGHLDGADR | GOLD ROAD vs. ORMAT TECHNOLOGIES |
| Applied Materials vs. National Beverage Corp | Applied Materials vs. Austevoll Seafood ASA | Applied Materials vs. DICKER DATA LTD | Applied Materials vs. PUBLIC STORAGE PRFO |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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