Correlation Between PICKN PAY and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both PICKN PAY 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 PICKN PAY and APPLIED MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PICKN PAY STORES and APPLIED MATERIALS, you can compare the effects of market volatilities on PICKN PAY 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 PICKN PAY with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PICKN PAY and APPLIED MATERIALS.
Diversification Opportunities for PICKN PAY and APPLIED MATERIALS
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PICKN and APPLIED is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding PICKN PAY STORES and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS and PICKN PAY 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 PICKN PAY STORES 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 PICKN PAY i.e., PICKN PAY and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between PICKN PAY and APPLIED MATERIALS
Assuming the 90 days trading horizon PICKN PAY STORES is expected to generate 0.98 times more return on investment than APPLIED MATERIALS. However, PICKN PAY STORES is 1.02 times less risky than APPLIED MATERIALS. It trades about -0.02 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about -0.03 per unit of risk. If you would invest 162.00 in PICKN PAY STORES on September 5, 2024 and sell it today you would lose (6.00) from holding PICKN PAY STORES or give up 3.7% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
PICKN PAY STORES vs. APPLIED MATERIALS
Performance |
Timeline |
PICKN PAY STORES |
APPLIED MATERIALS |
PICKN PAY and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PICKN PAY and APPLIED MATERIALS
The main advantage of trading using opposite PICKN PAY and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PICKN PAY 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.The idea behind PICKN PAY STORES and APPLIED MATERIALS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.APPLIED MATERIALS vs. JSC Halyk bank | APPLIED MATERIALS vs. REVO INSURANCE SPA | APPLIED MATERIALS vs. MARKET VECTR RETAIL | APPLIED MATERIALS vs. PICKN PAY STORES |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum |