Correlation Between Applied Materials and Innovacom
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Innovacom 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 Innovacom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Innovacom, you can compare the effects of market volatilities on Applied Materials and Innovacom 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 Innovacom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Innovacom.
Diversification Opportunities for Applied Materials and Innovacom
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Applied and Innovacom is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Innovacom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovacom 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 Innovacom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovacom has no effect on the direction of Applied Materials i.e., Applied Materials and Innovacom go up and down completely randomly.
Pair Corralation between Applied Materials and Innovacom
Given the investment horizon of 90 days Applied Materials is expected to generate 8.24 times less return on investment than Innovacom. But when comparing it to its historical volatility, Applied Materials is 18.25 times less risky than Innovacom. It trades about 0.28 of its potential returns per unit of risk. Innovacom is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Innovacom on September 11, 2025 and sell it today you would earn a total of 0.04 from holding Innovacom or generate 400.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Applied Materials vs. Innovacom
Performance |
| Timeline |
| Applied Materials |
| Innovacom |
Applied Materials and Innovacom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Innovacom
The main advantage of trading using opposite Applied Materials and Innovacom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Innovacom 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 Innovacom will offset losses from the drop in Innovacom's long position.| Applied Materials vs. Lam Research Corp | Applied Materials vs. Qualcomm Incorporated | Applied Materials vs. KLA Tencor | Applied Materials vs. Texas Instruments Incorporated |
| Innovacom vs. Metalert | Innovacom vs. Rapidtron | Innovacom vs. AllDigital Holdings | Innovacom vs. Avistar Communications Corp |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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