Correlation Between Applied Materials, and Global Crossing

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

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

Diversification Opportunities for Applied Materials, and Global Crossing

-0.34

Correlation Coefficient

Applied Materials,  Global Crossing

Very good diversification

The 3 months correlation between Applied and Global is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials, and Global Crossing Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Crossing Airlines 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 Global Crossing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Crossing Airlines has no effect on the direction of Applied Materials, i.e., Applied Materials, and Global Crossing go up and down completely randomly.

Pair Corralation between Applied Materials, and Global Crossing

Assuming the 90 days trading horizon Applied Materials, is expected to generate 0.65 times more return on investment than Global Crossing. However, Applied Materials, is 1.54 times less risky than Global Crossing. It trades about 0.17 of its potential returns per unit of risk. Global Crossing Airlines is currently generating about 0.0 per unit of risk. If you would invest  1,717  in Applied Materials, on April 25, 2025 and sell it today you would earn a total of  415.00  from holding Applied Materials, or generate 24.17% return on investment over 90 days.

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

Applied Materials,  vs.  Global Crossing Airlines

Applied Materials,

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials, are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Applied Materials, exhibited solid returns over the last few months and may actually be approaching a breakup point.

Global Crossing Airlines

Risk-Adjusted Performance

Weak

Over the last 90 days Global Crossing Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Global Crossing is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Applied Materials, and Global Crossing

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

The idea behind Applied Materials, and Global Crossing Airlines 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.