Correlation Between Vista Oil and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Vista Oil 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 Vista Oil and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vista Oil Gas and Applied Materials, you can compare the effects of market volatilities on Vista Oil 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 Vista Oil with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vista Oil and Applied Materials.
Diversification Opportunities for Vista Oil and Applied Materials
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vista and Applied is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vista Oil Gas and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Vista Oil 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 Vista Oil Gas 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 Vista Oil i.e., Vista Oil and Applied Materials go up and down completely randomly.
Pair Corralation between Vista Oil and Applied Materials
Assuming the 90 days trading horizon Vista Oil Gas is expected to generate 1.48 times more return on investment than Applied Materials. However, Vista Oil is 1.48 times more volatile than Applied Materials. It trades about 0.16 of its potential returns per unit of risk. Applied Materials is currently generating about 0.05 per unit of risk. If you would invest 100,000 in Vista Oil Gas on September 20, 2024 and sell it today you would earn a total of 12,183 from holding Vista Oil Gas or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vista Oil Gas vs. Applied Materials
Performance |
| Timeline |
| Vista Oil Gas |
| Applied Materials |
Vista Oil and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vista Oil and Applied Materials
The main advantage of trading using opposite Vista Oil and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vista Oil 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.| Vista Oil vs. Applied Materials | Vista Oil vs. Genworth Financial | Vista Oil vs. First Republic Bank | Vista Oil vs. Hoteles City Express |
| Applied Materials vs. The Select Sector | Applied Materials vs. Promotora y Operadora | Applied Materials vs. iShares Global Timber | Applied Materials vs. SPDR Series Trust |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |