Correlation Between GEAR4MUSIC and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both GEAR4MUSIC 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 GEAR4MUSIC and APPLIED MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEAR4MUSIC LS 10 and APPLIED MATERIALS, you can compare the effects of market volatilities on GEAR4MUSIC 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 GEAR4MUSIC with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEAR4MUSIC and APPLIED MATERIALS.
Diversification Opportunities for GEAR4MUSIC and APPLIED MATERIALS
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GEAR4MUSIC and APPLIED is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding GEAR4MUSIC LS 10 and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS and GEAR4MUSIC 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 GEAR4MUSIC LS 10 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 GEAR4MUSIC i.e., GEAR4MUSIC and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between GEAR4MUSIC and APPLIED MATERIALS
Assuming the 90 days horizon GEAR4MUSIC is expected to generate 1.23 times less return on investment than APPLIED MATERIALS. But when comparing it to its historical volatility, GEAR4MUSIC LS 10 is 1.12 times less risky than APPLIED MATERIALS. It trades about 0.03 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 15,709 in APPLIED MATERIALS on November 3, 2024 and sell it today you would earn a total of 1,663 from holding APPLIED MATERIALS or generate 10.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEAR4MUSIC LS 10 vs. APPLIED MATERIALS
Performance |
| Timeline |
| GEAR4MUSIC LS 10 |
| APPLIED MATERIALS |
GEAR4MUSIC and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEAR4MUSIC and APPLIED MATERIALS
The main advantage of trading using opposite GEAR4MUSIC and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEAR4MUSIC 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.| GEAR4MUSIC vs. Playtech plc | GEAR4MUSIC vs. Bio Techne Corp | GEAR4MUSIC vs. FARM 51 GROUP | GEAR4MUSIC vs. TITAN MACHINERY |
| APPLIED MATERIALS vs. SEKISUI CHEMICAL | APPLIED MATERIALS vs. China BlueChemical | APPLIED MATERIALS vs. Mitsubishi Gas Chemical | APPLIED MATERIALS vs. X FAB Silicon Foundries |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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