Correlation Between Gaming Realms and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Gaming Realms 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 Gaming Realms and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming Realms plc and Applied Materials, you can compare the effects of market volatilities on Gaming Realms 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 Gaming Realms with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Realms and Applied Materials.
Diversification Opportunities for Gaming Realms and Applied Materials
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gaming and Applied is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms plc and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Gaming Realms 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 Gaming Realms plc 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 Gaming Realms i.e., Gaming Realms and Applied Materials go up and down completely randomly.
Pair Corralation between Gaming Realms and Applied Materials
Assuming the 90 days trading horizon Gaming Realms is expected to generate 1.24 times less return on investment than Applied Materials. In addition to that, Gaming Realms is 1.02 times more volatile than Applied Materials. It trades about 0.04 of its total potential returns per unit of risk. Applied Materials is currently generating about 0.05 per unit of volatility. If you would invest 10,584 in Applied Materials on August 31, 2024 and sell it today you would earn a total of 6,573 from holding Applied Materials or generate 62.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Gaming Realms plc vs. Applied Materials
Performance |
| Timeline |
| Gaming Realms plc |
| Applied Materials |
Gaming Realms and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming Realms and Applied Materials
The main advantage of trading using opposite Gaming Realms and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Realms 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.| Gaming Realms vs. Berkshire Hathaway | Gaming Realms vs. Hyundai Motor | Gaming Realms vs. Samsung Electronics Co | Gaming Realms vs. Samsung Electronics Co |
| Applied Materials vs. Hochschild Mining plc | Applied Materials vs. Check Point Software | Applied Materials vs. Accsys Technologies PLC | Applied Materials vs. Gaming Realms plc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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