Correlation Between Apartment Investment and ON Semiconductor

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

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

Diversification Opportunities for Apartment Investment and ON Semiconductor

0.54

Correlation Coefficient

Apartment Investment  ON Semiconductor

Very weak diversification

The 3 months correlation between Apartment and O2NS34 is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Apartment Investment and and ON Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON Semiconductor and Apartment Investment 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 Apartment Investment and are associated (or correlated) with ON Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON Semiconductor has no effect on the direction of Apartment Investment i.e., Apartment Investment and ON Semiconductor go up and down completely randomly.

Pair Corralation between Apartment Investment and ON Semiconductor

Assuming the 90 days trading horizon Apartment Investment and is expected to generate 0.76 times more return on investment than ON Semiconductor. However, Apartment Investment and is 1.31 times less risky than ON Semiconductor. It trades about 0.04 of its potential returns per unit of risk. ON Semiconductor is currently generating about 0.02 per unit of risk. If you would invest  3,874  in Apartment Investment and on October 11, 2024 and sell it today you would earn a total of  1,376  from holding Apartment Investment and or generate 35.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

Apartment Investment and  vs.  ON Semiconductor

Apartment Investment and

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apartment Investment and are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Apartment Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ON Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ON Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Apartment Investment and ON Semiconductor

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

The idea behind Apartment Investment and and ON Semiconductor 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.