Correlation Between Seagate Technology and Applied Materials,

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

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

Diversification Opportunities for Seagate Technology and Applied Materials,

-0.15

Correlation Coefficient

Seagate Technology  Applied Materials,

Good diversification

The 3 months correlation between Seagate and Applied is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Seagate Technology Holdings and Applied Materials, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials, and Seagate Technology 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 Seagate Technology Holdings 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 Seagate Technology i.e., Seagate Technology and Applied Materials, go up and down completely randomly.

Pair Corralation between Seagate Technology and Applied Materials,

Assuming the 90 days trading horizon Seagate Technology is expected to generate 1.46 times less return on investment than Applied Materials,. But when comparing it to its historical volatility, Seagate Technology Holdings is 1.46 times less risky than Applied Materials,. It trades about 0.07 of its potential returns per unit of risk. Applied Materials, is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  7,251  in Applied Materials, on October 9, 2024 and sell it today you would earn a total of  3,629  from holding Applied Materials, or generate 50.05% return on investment over 90 days.

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

Seagate Technology Holdings  vs.  Applied Materials,

Seagate Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seagate Technology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Seagate Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 somewhat strong primary indicators, Applied Materials, is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Seagate Technology and Applied Materials,

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

The idea behind Seagate Technology Holdings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.