Correlation Between CARSALESCOM and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both CARSALESCOM 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 CARSALESCOM and APPLIED MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and APPLIED MATERIALS, you can compare the effects of market volatilities on CARSALESCOM 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 CARSALESCOM with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALESCOM and APPLIED MATERIALS.
Diversification Opportunities for CARSALESCOM and APPLIED MATERIALS
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CARSALESCOM and APPLIED is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS and CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM i.e., CARSALESCOM and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between CARSALESCOM and APPLIED MATERIALS
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.87 times more return on investment than APPLIED MATERIALS. However, CARSALESCOM is 1.15 times less risky than APPLIED MATERIALS. It trades about -0.21 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about -0.28 per unit of risk. If you would invest 2,400 in CARSALESCOM on December 1, 2024 and sell it today you would lose (220.00) from holding CARSALESCOM or give up 9.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. APPLIED MATERIALS
Performance |
| Timeline |
| CARSALESCOM |
| APPLIED MATERIALS |
CARSALESCOM and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALESCOM and APPLIED MATERIALS
The main advantage of trading using opposite CARSALESCOM and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALESCOM 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.| CARSALESCOM vs. Commercial Vehicle Group | CARSALESCOM vs. DEVRY EDUCATION GRP | CARSALESCOM vs. COMMERCIAL VEHICLE | CARSALESCOM vs. Geely Automobile Holdings |
| APPLIED MATERIALS vs. SLIGRO FOOD GROUP | APPLIED MATERIALS vs. Goodyear Tire Rubber | APPLIED MATERIALS vs. Austevoll Seafood ASA | APPLIED MATERIALS vs. China Modern Dairy |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |