Correlation Between Applied Materials and Tower One

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

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

Diversification Opportunities for Applied Materials and Tower One

0.0

Correlation Coefficient

Applied Materials  Tower One

Pay attention - limited upside

The 3 months correlation between Applied and Tower is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Tower One Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower One Wireless and Applied Materials 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 Applied Materials are associated (or correlated) with Tower One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower One Wireless has no effect on the direction of Applied Materials i.e., Applied Materials and Tower One go up and down completely randomly.

Pair Corralation between Applied Materials and Tower One

Assuming the 90 days horizon Applied Materials is expected to generate 1.01 times more return on investment than Tower One. However, Applied Materials is 1.01 times more volatile than Tower One Wireless. It trades about 0.06 of its potential returns per unit of risk. Tower One Wireless is currently generating about 0.0 per unit of risk. If you would invest  9,712  in Applied Materials on October 11, 2024 and sell it today you would earn a total of  7,574  from holding Applied Materials or generate 77.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Applied Materials  vs.  Tower One Wireless

Applied Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Tower One Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tower One Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tower One 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 Applied Materials and Tower One

The main advantage of trading using opposite Applied Materials and Tower One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Tower One 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 Tower One will offset losses from the drop in Tower One's long position.

The idea behind Applied Materials and Tower One Wireless 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.