Correlation Between Apartment Investment and Schlumberger

Can any of the company-specific risk be diversified away by investing in both Apartment Investment and Schlumberger 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 Schlumberger 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 Schlumberger Limited, you can compare the effects of market volatilities on Apartment Investment and Schlumberger 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 Schlumberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apartment Investment and Schlumberger.

Diversification Opportunities for Apartment Investment and Schlumberger

0.15

Correlation Coefficient

Apartment Investment  Schlumberger

Average diversification

The 3 months correlation between Apartment and Schlumberger is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Apartment Investment and and Schlumberger Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger Limited 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 Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger Limited has no effect on the direction of Apartment Investment i.e., Apartment Investment and Schlumberger go up and down completely randomly.

Pair Corralation between Apartment Investment and Schlumberger

Assuming the 90 days trading horizon Apartment Investment and is expected to generate 1.04 times more return on investment than Schlumberger. However, Apartment Investment is 1.04 times more volatile than Schlumberger Limited. It trades about 0.14 of its potential returns per unit of risk. Schlumberger Limited is currently generating about -0.04 per unit of risk. If you would invest  4,770  in Apartment Investment and on October 6, 2024 and sell it today you would earn a total of  816.00  from holding Apartment Investment and or generate 17.11% return on investment over 90 days.

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

Apartment Investment and  vs.  Schlumberger Limited

Apartment Investment and

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apartment Investment and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Apartment Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Schlumberger Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schlumberger Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Schlumberger is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Apartment Investment and Schlumberger

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

The idea behind Apartment Investment and and Schlumberger Limited 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.