Correlation Between MOUNT GIBSON and APPLIED MATERIALS

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

By analyzing existing cross correlation between MOUNT GIBSON IRON and APPLIED MATERIALS, you can compare the effects of market volatilities on MOUNT GIBSON and APPLIED MATERIALS 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 MOUNT GIBSON with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOUNT GIBSON and APPLIED MATERIALS.

Diversification Opportunities for MOUNT GIBSON and APPLIED MATERIALS

-0.11

Correlation Coefficient

MOUNT GIBSON  APPLIED MATERIALS

Good diversification

The 3 months correlation between MOUNT and APPLIED is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding MOUNT GIBSON IRON and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS and MOUNT GIBSON 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 MOUNT GIBSON IRON are associated (or correlated) with APPLIED MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLIED MATERIALS has no effect on the direction of MOUNT GIBSON i.e., MOUNT GIBSON and APPLIED MATERIALS go up and down completely randomly.

Pair Corralation between MOUNT GIBSON and APPLIED MATERIALS

Assuming the 90 days trading horizon MOUNT GIBSON is expected to generate 1.01 times less return on investment than APPLIED MATERIALS. In addition to that, MOUNT GIBSON is 1.71 times more volatile than APPLIED MATERIALS. It trades about 0.09 of its total potential returns per unit of risk. APPLIED MATERIALS is currently generating about 0.15 per unit of volatility. If you would invest  13,099  in APPLIED MATERIALS on April 24, 2025 and sell it today you would earn a total of  2,823  from holding APPLIED MATERIALS or generate 21.55% return on investment over 90 days.

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

MOUNT GIBSON IRON  vs.  APPLIED MATERIALS

MOUNT GIBSON IRON

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MOUNT GIBSON IRON are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, MOUNT GIBSON unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with MOUNT GIBSON and APPLIED MATERIALS

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

The idea behind MOUNT GIBSON IRON and APPLIED MATERIALS 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.