Correlation Between Yokohama Rubber and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both Yokohama Rubber 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 Yokohama Rubber and APPLIED MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Yokohama Rubber and APPLIED MATERIALS, you can compare the effects of market volatilities on Yokohama Rubber 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 Yokohama Rubber with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokohama Rubber and APPLIED MATERIALS.
Diversification Opportunities for Yokohama Rubber and APPLIED MATERIALS
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Yokohama and APPLIED is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding The Yokohama Rubber and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS and Yokohama Rubber 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 The Yokohama Rubber 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 Yokohama Rubber i.e., Yokohama Rubber and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between Yokohama Rubber and APPLIED MATERIALS
Assuming the 90 days trading horizon The Yokohama Rubber is expected to generate 0.75 times more return on investment than APPLIED MATERIALS. However, The Yokohama Rubber is 1.33 times less risky than APPLIED MATERIALS. It trades about 0.03 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about -0.03 per unit of risk. If you would invest 1,880 in The Yokohama Rubber on August 31, 2024 and sell it today you would earn a total of 20.00 from holding The Yokohama Rubber or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Yokohama Rubber vs. APPLIED MATERIALS
Performance |
| Timeline |
| Yokohama Rubber |
| APPLIED MATERIALS |
Yokohama Rubber and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yokohama Rubber and APPLIED MATERIALS
The main advantage of trading using opposite Yokohama Rubber and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yokohama Rubber 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.| Yokohama Rubber vs. UNIVMUSIC GRPADR050 | Yokohama Rubber vs. Treasury Wine Estates | Yokohama Rubber vs. PARKEN Sport Entertainment | Yokohama Rubber vs. Flutter Entertainment PLC |
| APPLIED MATERIALS vs. Goodyear Tire Rubber | APPLIED MATERIALS vs. Entravision Communications | APPLIED MATERIALS vs. SBA Communications Corp | APPLIED MATERIALS vs. Ribbon Communications |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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