Correlation Between HEALTHCARE TRPFD and Apple

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

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

Diversification Opportunities for HEALTHCARE TRPFD and Apple

-0.19

Correlation Coefficient

HEALTHCARE TRPFD  Apple

Good diversification

The 3 months correlation between HEALTHCARE and Apple is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHCARE TRPFD SH and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and HEALTHCARE TRPFD 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 HEALTHCARE TRPFD SH are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of HEALTHCARE TRPFD i.e., HEALTHCARE TRPFD and Apple go up and down completely randomly.

Pair Corralation between HEALTHCARE TRPFD and Apple

Assuming the 90 days horizon HEALTHCARE TRPFD SH is expected to under-perform the Apple. In addition to that, HEALTHCARE TRPFD is 2.82 times more volatile than Apple Inc. It trades about -0.28 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.65 per unit of volatility. If you would invest  22,395  in Apple Inc on September 27, 2024 and sell it today you would earn a total of  2,060  from holding Apple Inc or generate 9.2% return on investment over 90 days.

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

HEALTHCARE TRPFD SH  vs.  Apple Inc

HEALTHCARE TRPFD

Risk-Adjusted Performance

0 of 100

Very Weak

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

Apple Inc

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Apple displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HEALTHCARE TRPFD and Apple

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

The idea behind HEALTHCARE TRPFD SH and Apple Inc 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.