Correlation Between Apple and DRI Healthcare

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

Diversification Opportunities for Apple and DRI Healthcare

0.13

Correlation Coefficient

Apple  DRI Healthcare

Average diversification

The 3 months correlation between Apple and DRI is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and DRI Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRI Healthcare Trust 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 DRI Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRI Healthcare Trust has no effect on the direction of Apple i.e., Apple and DRI Healthcare go up and down completely randomly.

Pair Corralation between Apple and DRI Healthcare

Assuming the 90 days trading horizon Apple Inc CDR is expected to under-perform the DRI Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc CDR is 1.09 times less risky than DRI Healthcare. The stock trades about -0.14 of its potential returns per unit of risk. The DRI Healthcare Trust is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,205  in DRI Healthcare Trust on December 22, 2024 and sell it today you would lose (48.00) from holding DRI Healthcare Trust or give up 3.98% of portfolio value over 90 days.

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

Apple Inc CDR  vs.  DRI Healthcare Trust

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

DRI Healthcare Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days DRI Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DRI Healthcare is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Apple and DRI Healthcare

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

The idea behind Apple Inc CDR and DRI Healthcare Trust 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.