Correlation Between Applied Materials and LIFEWAY FOODS
Can any of the company-specific risk be diversified away by investing in both Applied Materials and LIFEWAY FOODS 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 LIFEWAY FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and LIFEWAY FOODS, you can compare the effects of market volatilities on Applied Materials and LIFEWAY FOODS 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 LIFEWAY FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and LIFEWAY FOODS.
Diversification Opportunities for Applied Materials and LIFEWAY FOODS
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Applied and LIFEWAY is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and LIFEWAY FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFEWAY FOODS 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 LIFEWAY FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFEWAY FOODS has no effect on the direction of Applied Materials i.e., Applied Materials and LIFEWAY FOODS go up and down completely randomly.
Pair Corralation between Applied Materials and LIFEWAY FOODS
Assuming the 90 days horizon Applied Materials is expected to under-perform the LIFEWAY FOODS. In addition to that, Applied Materials is 1.11 times more volatile than LIFEWAY FOODS. It trades about -0.12 of its total potential returns per unit of risk. LIFEWAY FOODS is currently generating about -0.09 per unit of volatility. If you would invest 2,240 in LIFEWAY FOODS on September 24, 2024 and sell it today you would lose (100.00) from holding LIFEWAY FOODS or give up 4.46% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Applied Materials vs. LIFEWAY FOODS
Performance |
Timeline |
Applied Materials |
LIFEWAY FOODS |
Applied Materials and LIFEWAY FOODS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Applied Materials and LIFEWAY FOODS
The main advantage of trading using opposite Applied Materials and LIFEWAY FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, LIFEWAY FOODS 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 LIFEWAY FOODS will offset losses from the drop in LIFEWAY FOODS's long position.Applied Materials vs. ASML HOLDING NY | Applied Materials vs. ASML Holding NV | Applied Materials vs. ASML Holding NV | Applied Materials vs. Tokyo Electron Limited |
LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Microsoft |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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