Correlation Between Corporate Office and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both Corporate Office 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 Corporate Office and APPLIED MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Office Properties and APPLIED MATERIALS, you can compare the effects of market volatilities on Corporate Office 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 Corporate Office with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and APPLIED MATERIALS.
Diversification Opportunities for Corporate Office and APPLIED MATERIALS
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Corporate and APPLIED is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS and Corporate Office 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 Corporate Office Properties 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 Corporate Office i.e., Corporate Office and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between Corporate Office and APPLIED MATERIALS
Assuming the 90 days horizon Corporate Office Properties is expected to under-perform the APPLIED MATERIALS. But the stock apears to be less risky and, when comparing its historical volatility, Corporate Office Properties is 1.61 times less risky than APPLIED MATERIALS. The stock trades about -0.38 of its potential returns per unit of risk. The APPLIED MATERIALS is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 16,380 in APPLIED MATERIALS on November 28, 2024 and sell it today you would lose (610.00) from holding APPLIED MATERIALS or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Office Properties vs. APPLIED MATERIALS
Performance |
| Timeline |
| Corporate Office Pro |
| APPLIED MATERIALS |
Corporate Office and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and APPLIED MATERIALS
The main advantage of trading using opposite Corporate Office and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office 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.| Corporate Office vs. Gladstone Investment | Corporate Office vs. Addtech AB | Corporate Office vs. MidCap Financial Investment | Corporate Office vs. THORNEY TECHS LTD |
| APPLIED MATERIALS vs. MCEWEN MINING INC | APPLIED MATERIALS vs. Jacquet Metal Service | APPLIED MATERIALS vs. Sunny Optical Technology | APPLIED MATERIALS vs. GRIFFIN MINING LTD |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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