Correlation Between FinecoBank SpA and Applied Materials

Can any of the company-specific risk be diversified away by investing in both FinecoBank SpA 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 FinecoBank SpA and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FinecoBank SpA and Applied Materials, you can compare the effects of market volatilities on FinecoBank SpA 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 FinecoBank SpA with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of FinecoBank SpA and Applied Materials.

Diversification Opportunities for FinecoBank SpA and Applied Materials

0.0

Correlation Coefficient

FinecoBank SpA  Applied Materials

Pay attention - limited upside

The 3 months correlation between FinecoBank and Applied is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FinecoBank SpA and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and FinecoBank SpA 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 FinecoBank SpA 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 FinecoBank SpA i.e., FinecoBank SpA and Applied Materials go up and down completely randomly.

Pair Corralation between FinecoBank SpA and Applied Materials

Assuming the 90 days trading horizon FinecoBank SpA is expected to generate 1.78 times less return on investment than Applied Materials. But when comparing it to its historical volatility, FinecoBank SpA is 2.15 times less risky than Applied Materials. It trades about 0.3 of its potential returns per unit of risk. Applied Materials is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  16,677  in Applied Materials on October 26, 2024 and sell it today you would earn a total of  2,163  from holding Applied Materials or generate 12.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

FinecoBank SpA  vs.  Applied Materials

FinecoBank SpA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FinecoBank SpA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, FinecoBank SpA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Applied Materials

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Applied Materials is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FinecoBank SpA and Applied Materials

The main advantage of trading using opposite FinecoBank SpA and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FinecoBank SpA 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.

The idea behind FinecoBank SpA 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.