Correlation Between Peak Resources and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both Peak Resources 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 Peak Resources and APPLIED MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peak Resources Limited and APPLIED MATERIALS, you can compare the effects of market volatilities on Peak Resources 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 Peak Resources with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peak Resources and APPLIED MATERIALS.
Diversification Opportunities for Peak Resources and APPLIED MATERIALS
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Peak and APPLIED is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS and Peak Resources 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 Peak Resources Limited 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 Peak Resources i.e., Peak Resources and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between Peak Resources and APPLIED MATERIALS
Assuming the 90 days horizon Peak Resources Limited is expected to under-perform the APPLIED MATERIALS. In addition to that, Peak Resources is 2.92 times more volatile than APPLIED MATERIALS. It trades about 0.0 of its total potential returns per unit of risk. APPLIED MATERIALS is currently generating about 0.06 per unit of volatility. If you would invest 10,105 in APPLIED MATERIALS on September 4, 2024 and sell it today you would earn a total of 7,191 from holding APPLIED MATERIALS or generate 71.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Peak Resources Limited vs. APPLIED MATERIALS
Performance |
| Timeline |
| Peak Resources |
| APPLIED MATERIALS |
Peak Resources and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peak Resources and APPLIED MATERIALS
The main advantage of trading using opposite Peak Resources and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peak Resources 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.| Peak Resources vs. BHP Group Limited | Peak Resources vs. Rio Tinto Group | Peak Resources vs. Vale SA | Peak Resources vs. Glencore plc |
| APPLIED MATERIALS vs. TOTAL GABON | APPLIED MATERIALS vs. Walgreens Boots Alliance | APPLIED MATERIALS vs. Peak Resources Limited |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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