Correlation Between APPLIED MATERIALS and Macys

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

By analyzing existing cross correlation between APPLIED MATERIALS and Macys Inc, you can compare the effects of market volatilities on APPLIED MATERIALS and Macys 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 Macys. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Macys.

Diversification Opportunities for APPLIED MATERIALS and Macys

0.27

Correlation Coefficient

APPLIED MATERIALS  Macys

Modest diversification

The 3 months correlation between APPLIED and Macys is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc 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 Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and Macys go up and down completely randomly.

Pair Corralation between APPLIED MATERIALS and Macys

Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 0.83 times more return on investment than Macys. However, APPLIED MATERIALS is 1.21 times less risky than Macys. It trades about 0.15 of its potential returns per unit of risk. Macys Inc is currently generating about 0.09 per unit of risk. If you would invest  13,099  in APPLIED MATERIALS on April 24, 2025 and sell it today you would earn a total of  2,805  from holding APPLIED MATERIALS or generate 21.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

APPLIED MATERIALS  vs.  Macys Inc

APPLIED MATERIALS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in APPLIED MATERIALS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, APPLIED MATERIALS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Macys Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Macys reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with APPLIED MATERIALS and Macys

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

The idea behind APPLIED MATERIALS and Macys Inc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.