Correlation Between Applied Materials and Brooks Automation

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

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

Diversification Opportunities for Applied Materials and Brooks Automation

0.0

Correlation Coefficient

Applied Materials  Brooks Automation

Pay attention - limited upside

The 3 months correlation between Applied and Brooks is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Brooks Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brooks Automation 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 Brooks Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brooks Automation has no effect on the direction of Applied Materials i.e., Applied Materials and Brooks Automation go up and down completely randomly.

Pair Corralation between Applied Materials and Brooks Automation

If you would invest  10,967  in Applied Materials on January 20, 2024 and sell it today you would earn a total of  8,465  from holding Applied Materials or generate 77.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Applied Materials  vs.  Brooks Automation

Applied Materials

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials are ranked lower than 8 (%) 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.

Brooks Automation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brooks Automation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Brooks Automation is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Applied Materials and Brooks Automation

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

The idea behind Applied Materials and Brooks Automation 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.