Correlation Between Applied Materials and Entegris

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

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

Diversification Opportunities for Applied Materials and Entegris

0.72

Correlation Coefficient

Applied Materials  Entegris

Poor diversification

The 3 months correlation between Applied and Entegris is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Entegris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entegris 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 Entegris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entegris has no effect on the direction of Applied Materials i.e., Applied Materials and Entegris go up and down completely randomly.

Pair Corralation between Applied Materials and Entegris

Given the investment horizon of 90 days Applied Materials is expected to generate 0.58 times more return on investment than Entegris. However, Applied Materials is 1.73 times less risky than Entegris. It trades about 0.18 of its potential returns per unit of risk. Entegris is currently generating about -0.01 per unit of risk. If you would invest  15,466  in Applied Materials on May 2, 2025 and sell it today you would earn a total of  3,473  from holding Applied Materials or generate 22.46% return on investment over 90 days.

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

Applied Materials  vs.  Entegris

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 comparatively unsteady basic indicators, Applied Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Entegris

Risk-Adjusted Performance

OK

Over the last 90 days Entegris has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Entegris is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Applied Materials and Entegris

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

The idea behind Applied Materials and Entegris 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.