Correlation Between Applied Materials and Pacific Horizon
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Pacific Horizon 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 Pacific Horizon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Pacific Horizon Investment, you can compare the effects of market volatilities on Applied Materials and Pacific Horizon 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 Pacific Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Pacific Horizon.
Diversification Opportunities for Applied Materials and Pacific Horizon
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Applied and Pacific is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Pacific Horizon Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Horizon Inve 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 Pacific Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Horizon Inve has no effect on the direction of Applied Materials i.e., Applied Materials and Pacific Horizon go up and down completely randomly.
Pair Corralation between Applied Materials and Pacific Horizon
Assuming the 90 days trading horizon Applied Materials is expected to generate 2.53 times more return on investment than Pacific Horizon. However, Applied Materials is 2.53 times more volatile than Pacific Horizon Investment. It trades about 0.27 of its potential returns per unit of risk. Pacific Horizon Investment is currently generating about 0.16 per unit of risk. If you would invest 15,940 in Applied Materials on August 29, 2025 and sell it today you would earn a total of 8,935 from holding Applied Materials or generate 56.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. Pacific Horizon Investment
Performance |
| Timeline |
| Applied Materials |
| Pacific Horizon Inve |
Applied Materials and Pacific Horizon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Pacific Horizon
The main advantage of trading using opposite Applied Materials and Pacific Horizon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Pacific Horizon 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 Pacific Horizon will offset losses from the drop in Pacific Horizon's long position.| Applied Materials vs. Beazer Homes USA | Applied Materials vs. MoneysupermarketCom Group PLC | Applied Materials vs. Ecclesiastical Insurance Office | Applied Materials vs. Roebuck Food Group |
| Pacific Horizon vs. Tata Steel Limited | Pacific Horizon vs. Tatton Asset Management | Pacific Horizon vs. Liontrust Asset Management | Pacific Horizon vs. Dentsply Sirona |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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