Correlation Between APPLIED MATERIALS and UNITED UTILITIES

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

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

Diversification Opportunities for APPLIED MATERIALS and UNITED UTILITIES

-0.28

Correlation Coefficient

APPLIED MATERIALS  UNITED UTILITIES

Very good diversification

The 3 months correlation between APPLIED and UNITED is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and UNITED UTILITIES GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED UTILITIES 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 UNITED UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED UTILITIES has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and UNITED UTILITIES go up and down completely randomly.

Pair Corralation between APPLIED MATERIALS and UNITED UTILITIES

Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.72 times more return on investment than UNITED UTILITIES. However, APPLIED MATERIALS is 1.72 times more volatile than UNITED UTILITIES GR. It trades about 0.1 of its potential returns per unit of risk. UNITED UTILITIES GR is currently generating about 0.03 per unit of risk. If you would invest  13,617  in APPLIED MATERIALS on May 4, 2025 and sell it today you would earn a total of  1,941  from holding APPLIED MATERIALS or generate 14.25% 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.  UNITED UTILITIES GR

APPLIED MATERIALS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in APPLIED MATERIALS are ranked lower than 7 (%) 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.

UNITED UTILITIES

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED UTILITIES GR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, UNITED UTILITIES is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with APPLIED MATERIALS and UNITED UTILITIES

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

The idea behind APPLIED MATERIALS and UNITED UTILITIES GR 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 Stocks Directory module to find actively traded stocks across global markets.