Correlation Between Apple and Goeasy

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

Diversification Opportunities for Apple and Goeasy

-0.59

Correlation Coefficient

Apple  Goeasy

Excellent diversification

The 3 months correlation between Apple and Goeasy is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and goeasy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on goeasy 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 Goeasy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of goeasy has no effect on the direction of Apple i.e., Apple and Goeasy go up and down completely randomly.

Pair Corralation between Apple and Goeasy

Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.78 times more return on investment than Goeasy. However, Apple Inc CDR is 1.28 times less risky than Goeasy. It trades about -0.02 of its potential returns per unit of risk. goeasy is currently generating about -0.03 per unit of risk. If you would invest  3,556  in Apple Inc CDR on December 4, 2024 and sell it today you would lose (90.00) from holding Apple Inc CDR or give up 2.53% of portfolio value over 90 days.

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

Apple Inc CDR  vs.  goeasy

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

goeasy

Risk-Adjusted Performance

Very Weak

Over the last 90 days goeasy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Goeasy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Apple and Goeasy

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

The idea behind Apple Inc CDR and goeasy 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.