Correlation Between APPLIED MATERIALS and ENSTAR GROUP
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and ENSTAR GROUP 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 ENSTAR GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and ENSTAR GROUP LTD, you can compare the effects of market volatilities on APPLIED MATERIALS and ENSTAR GROUP 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 ENSTAR GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and ENSTAR GROUP.
Diversification Opportunities for APPLIED MATERIALS and ENSTAR GROUP
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between APPLIED and ENSTAR is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and ENSTAR GROUP LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENSTAR GROUP LTD 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 ENSTAR GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENSTAR GROUP LTD has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and ENSTAR GROUP go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and ENSTAR GROUP
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to under-perform the ENSTAR GROUP. In addition to that, APPLIED MATERIALS is 4.58 times more volatile than ENSTAR GROUP LTD. It trades about -0.35 of its total potential returns per unit of risk. ENSTAR GROUP LTD is currently generating about -0.06 per unit of volatility. If you would invest 31,800 in ENSTAR GROUP LTD on December 5, 2024 and sell it today you would lose (200.00) from holding ENSTAR GROUP LTD or give up 0.63% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
APPLIED MATERIALS vs. ENSTAR GROUP LTD
Performance |
Timeline |
APPLIED MATERIALS |
ENSTAR GROUP LTD |
Risk-Adjusted Performance
Good
Weak | Strong |
APPLIED MATERIALS and ENSTAR GROUP Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with APPLIED MATERIALS and ENSTAR GROUP
The main advantage of trading using opposite APPLIED MATERIALS and ENSTAR GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, ENSTAR GROUP 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 ENSTAR GROUP will offset losses from the drop in ENSTAR GROUP's long position.APPLIED MATERIALS vs. Investment AB Latour | APPLIED MATERIALS vs. New Residential Investment | APPLIED MATERIALS vs. Singapore Airlines Limited | APPLIED MATERIALS vs. JAPAN AIRLINES |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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