Correlation Between Lam Research and Applied Materials,

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

By analyzing existing cross correlation between Lam Research and Applied Materials,, you can compare the effects of market volatilities on Lam Research 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 Lam Research with a short position of Applied Materials,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lam Research and Applied Materials,.

Diversification Opportunities for Lam Research and Applied Materials,

0.96

Correlation Coefficient

Lam Research  Applied Materials,

Almost no diversification

The 3 months correlation between Lam and Applied is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Lam Research and Applied Materials, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials, and Lam Research 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 Lam Research 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 Lam Research i.e., Lam Research and Applied Materials, go up and down completely randomly.

Pair Corralation between Lam Research and Applied Materials,

Assuming the 90 days trading horizon Lam Research is expected to generate 0.76 times more return on investment than Applied Materials,. However, Lam Research is 1.31 times less risky than Applied Materials,. It trades about 0.29 of its potential returns per unit of risk. Applied Materials, is currently generating about 0.14 per unit of risk. If you would invest  894.00  in Lam Research on April 24, 2025 and sell it today you would earn a total of  350.00  from holding Lam Research or generate 39.15% return on investment over 90 days.

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

Lam Research  vs.  Applied Materials,

Lam Research

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lam Research are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lam Research sustained 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. Despite somewhat weak primary indicators, Applied Materials, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lam Research and Applied Materials,

The main advantage of trading using opposite Lam Research and Applied Materials, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lam Research 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 Lam Research 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.

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 the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.