Correlation Between MongoDB and Applied Materials

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

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

Diversification Opportunities for MongoDB and Applied Materials

-0.53

Correlation Coefficient

MongoDB  Applied Materials

Excellent diversification

The 3 months correlation between MongoDB and Applied is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding MongoDB and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and MongoDB 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 MongoDB 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 MongoDB i.e., MongoDB and Applied Materials go up and down completely randomly.

Pair Corralation between MongoDB and Applied Materials

Considering the 90-day investment horizon MongoDB is expected to under-perform the Applied Materials. In addition to that, MongoDB is 2.05 times more volatile than Applied Materials. It trades about -0.19 of its total potential returns per unit of risk. Applied Materials is currently generating about 0.13 per unit of volatility. If you would invest  20,038  in Applied Materials on March 14, 2024 and sell it today you would earn a total of  2,959  from holding Applied Materials or generate 14.77% return on investment over 90 days.

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

MongoDB  vs.  Applied Materials

MongoDB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MongoDB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Applied Materials

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Applied Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MongoDB and Applied Materials

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

The idea behind MongoDB 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.