Correlation Between Apple and Aritzia
Can any of the company-specific risk be diversified away by investing in both Apple and Aritzia 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 Apple and Aritzia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc CDR and Aritzia, you can compare the effects of market volatilities on Apple and Aritzia 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 Apple with a short position of Aritzia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Aritzia.
Diversification Opportunities for Apple and Aritzia
Weak diversification
The 3 months correlation between Apple and Aritzia is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Aritzia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aritzia and Apple 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 Apple Inc CDR are associated (or correlated) with Aritzia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aritzia has no effect on the direction of Apple i.e., Apple and Aritzia go up and down completely randomly.
Pair Corralation between Apple and Aritzia
Assuming the 90 days trading horizon Apple Inc CDR is expected to under-perform the Aritzia. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc CDR is 2.46 times less risky than Aritzia. The stock trades about -0.04 of its potential returns per unit of risk. The Aritzia is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,446 in Aritzia on October 23, 2024 and sell it today you would earn a total of 2,486 from holding Aritzia or generate 55.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Apple Inc CDR vs. Aritzia
Performance |
Timeline |
Apple Inc CDR |
Aritzia |
Apple and Aritzia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Apple and Aritzia
The main advantage of trading using opposite Apple and Aritzia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Aritzia 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 Aritzia will offset losses from the drop in Aritzia's long position.Apple vs. Calibre Mining Corp | Apple vs. Monument Mining Limited | Apple vs. Aya Gold Silver | Apple vs. Forsys Metals Corp |
Aritzia vs. Canada Goose Holdings | Aritzia vs. Restaurant Brands International | Aritzia vs. Lightspeed Commerce | Aritzia vs. goeasy |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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