Correlation Between Flowers Foods and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both Flowers Foods 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 Flowers Foods and APPLIED MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowers Foods and APPLIED MATERIALS, you can compare the effects of market volatilities on Flowers Foods 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 Flowers Foods with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowers Foods and APPLIED MATERIALS.
Diversification Opportunities for Flowers Foods and APPLIED MATERIALS
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flowers and APPLIED is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS and Flowers Foods 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 Flowers Foods 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 Flowers Foods i.e., Flowers Foods and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between Flowers Foods and APPLIED MATERIALS
Assuming the 90 days horizon Flowers Foods is expected to generate 0.57 times more return on investment than APPLIED MATERIALS. However, Flowers Foods is 1.76 times less risky than APPLIED MATERIALS. It trades about 0.18 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about 0.01 per unit of risk. If you would invest 1,998 in Flowers Foods on September 1, 2024 and sell it today you would earn a total of 118.00 from holding Flowers Foods or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowers Foods vs. APPLIED MATERIALS
Performance |
| Timeline |
| Flowers Foods |
| APPLIED MATERIALS |
Flowers Foods and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowers Foods and APPLIED MATERIALS
The main advantage of trading using opposite Flowers Foods and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowers Foods 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.| Flowers Foods vs. APPLIED MATERIALS | Flowers Foods vs. USWE SPORTS AB | Flowers Foods vs. Materialise NV | Flowers Foods vs. Sumitomo Rubber Industries |
| APPLIED MATERIALS vs. QBE Insurance Group | APPLIED MATERIALS vs. Selective Insurance Group | APPLIED MATERIALS vs. Singapore Reinsurance | APPLIED MATERIALS vs. United Natural Foods |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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