Correlation Between Applied Materials and Roumell Opportunistic

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

By analyzing existing cross correlation between Applied Materials and Roumell Opportunistic Value, you can compare the effects of market volatilities on Applied Materials and Roumell Opportunistic 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 Roumell Opportunistic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Roumell Opportunistic.

Diversification Opportunities for Applied Materials and Roumell Opportunistic

0.69

Correlation Coefficient

Applied Materials  Roumell Opportunistic

Poor diversification

The 3 months correlation between Applied and Roumell is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Roumell Opportunistic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roumell Opportunistic 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 Roumell Opportunistic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roumell Opportunistic has no effect on the direction of Applied Materials i.e., Applied Materials and Roumell Opportunistic go up and down completely randomly.

Pair Corralation between Applied Materials and Roumell Opportunistic

Given the investment horizon of 90 days Applied Materials is expected to generate 2.37 times more return on investment than Roumell Opportunistic. However, Applied Materials is 2.37 times more volatile than Roumell Opportunistic Value. It trades about 0.09 of its potential returns per unit of risk. Roumell Opportunistic Value is currently generating about 0.11 per unit of risk. If you would invest  18,588  in Applied Materials on February 14, 2024 and sell it today you would earn a total of  2,236  from holding Applied Materials or generate 12.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Applied Materials  vs.  Roumell Opportunistic Value

Applied Materials

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Applied Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Roumell Opportunistic

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Roumell Opportunistic Value are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Roumell Opportunistic may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Applied Materials and Roumell Opportunistic

The main advantage of trading using opposite Applied Materials and Roumell Opportunistic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Roumell Opportunistic 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 Roumell Opportunistic will offset losses from the drop in Roumell Opportunistic's long position.

The idea behind Applied Materials and Roumell Opportunistic Value 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.

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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 Stocks Directory module to find actively traded stocks across global markets.