Correlation Between Applied Materials and One Choice

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Can any of the company-specific risk be diversified away by investing in both Applied Materials and One Choice 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 One Choice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and One Choice Blend, you can compare the effects of market volatilities on Applied Materials and One Choice 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 One Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and One Choice.

Diversification Opportunities for Applied Materials and One Choice

  Correlation Coefficient

Almost no diversification

The 3 months correlation between Applied and AAAFX is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and One Choice Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Choice Blend 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 One Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Choice Blend has no effect on the direction of Applied Materials i.e., Applied Materials and One Choice go up and down completely randomly.

Pair Corralation between Applied Materials and One Choice

Given the investment horizon of 90 days Applied Materials is expected to under-perform the One Choice. In addition to that, Applied Materials is 3.73 times more volatile than One Choice Blend. It trades about -0.29 of its total potential returns per unit of risk. One Choice Blend is currently generating about -0.23 per unit of volatility. If you would invest  948.00  in One Choice Blend on March 28, 2022 and sell it today you would lose (38.00)  from holding One Choice Blend or give up 4.01% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
ValuesDaily Returns

Applied Materials  vs.  One Choice Blend

 Performance (%) 
Applied Materials 
Applied Performance
0 of 100
Over the last 90 days Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Applied Price Channel

One Choice Blend 
AAAFX Performance
0 of 100
Over the last 90 days One Choice Blend has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

AAAFX Price Channel

Applied Materials and One Choice Volatility Contrast

 Predicted Return Density 

Pair Trading with Applied Materials and One Choice

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

Applied Materials

Pair trading matchups for Applied Materials

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IpathB SP vs. Applied Materials
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Applied Materials as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Applied Materials' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Applied Materials' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Applied Materials.
The idea behind Applied Materials and One Choice Blend 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.

One Choice Blend

Pair trading matchups for One Choice

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 Shere Portfolio module to track or share privately all of your investments from the convenience of any device.

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