Correlation Between Grupo Industrial and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Grupo Industrial 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 Grupo Industrial and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Industrial Saltillo and Applied Materials, you can compare the effects of market volatilities on Grupo Industrial 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 Grupo Industrial with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Industrial and Applied Materials.
Diversification Opportunities for Grupo Industrial and Applied Materials
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grupo and Applied is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Industrial Saltillo and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Grupo Industrial 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 Grupo Industrial Saltillo 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 Grupo Industrial i.e., Grupo Industrial and Applied Materials go up and down completely randomly.
Pair Corralation between Grupo Industrial and Applied Materials
Assuming the 90 days trading horizon Grupo Industrial Saltillo is expected to generate 0.56 times more return on investment than Applied Materials. However, Grupo Industrial Saltillo is 1.8 times less risky than Applied Materials. It trades about 0.28 of its potential returns per unit of risk. Applied Materials is currently generating about 0.14 per unit of risk. If you would invest 1,670 in Grupo Industrial Saltillo on October 13, 2024 and sell it today you would earn a total of 78.00 from holding Grupo Industrial Saltillo or generate 4.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Grupo Industrial Saltillo vs. Applied Materials
Performance |
| Timeline |
| Grupo Industrial Saltillo |
| Applied Materials |
Grupo Industrial and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Industrial and Applied Materials
The main advantage of trading using opposite Grupo Industrial and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Industrial 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.| Grupo Industrial vs. Cydsa SAB de | Grupo Industrial vs. Promotora y Operadora | Grupo Industrial vs. Grupo KUO SAB | Grupo Industrial vs. Organizacin Cultiba SAB |
| Applied Materials vs. Deutsche Bank Aktiengesellschaft | Applied Materials vs. Cognizant Technology Solutions | Applied Materials vs. Grupo Industrial Saltillo | Applied Materials vs. Southern Copper |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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