Correlation Between Apple and Corus Entertainment

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

Diversification Opportunities for Apple and Corus Entertainment

-0.3

Correlation Coefficient

Apple  Corus Entertainment

Very good diversification

The 3 months correlation between Apple and Corus is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Corus Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corus Entertainment 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 Corus Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corus Entertainment has no effect on the direction of Apple i.e., Apple and Corus Entertainment go up and down completely randomly.

Pair Corralation between Apple and Corus Entertainment

Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.24 times more return on investment than Corus Entertainment. However, Apple Inc CDR is 4.14 times less risky than Corus Entertainment. It trades about 0.01 of its potential returns per unit of risk. Corus Entertainment is currently generating about -0.02 per unit of risk. If you would invest  3,506  in Apple Inc CDR on December 2, 2024 and sell it today you would earn a total of  6.00  from holding Apple Inc CDR or generate 0.17% return on investment over 90 days.

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

Apple Inc CDR  vs.  Corus Entertainment

Apple Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Apple is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Corus Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corus Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Apple and Corus Entertainment

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

The idea behind Apple Inc CDR and Corus Entertainment 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.