Correlation Between Apple and Imagine Lithium
Can any of the company-specific risk be diversified away by investing in both Apple and Imagine Lithium 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 Imagine Lithium 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 Imagine Lithium, you can compare the effects of market volatilities on Apple and Imagine Lithium 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 Imagine Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Imagine Lithium.
Diversification Opportunities for Apple and Imagine Lithium
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and Imagine is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Imagine Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imagine Lithium 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 Imagine Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imagine Lithium has no effect on the direction of Apple i.e., Apple and Imagine Lithium go up and down completely randomly.
Pair Corralation between Apple and Imagine Lithium
Assuming the 90 days trading horizon Apple is expected to generate 133.75 times less return on investment than Imagine Lithium. But when comparing it to its historical volatility, Apple Inc CDR is 10.94 times less risky than Imagine Lithium. It trades about 0.01 of its potential returns per unit of risk. Imagine Lithium is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Imagine Lithium on December 1, 2024 and sell it today you would earn a total of 1.00 from holding Imagine Lithium or generate 50.0% 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. Imagine Lithium
Performance |
Timeline |
Apple Inc CDR |
Imagine Lithium |
Apple and Imagine Lithium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Apple and Imagine Lithium
The main advantage of trading using opposite Apple and Imagine Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Imagine Lithium 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 Imagine Lithium will offset losses from the drop in Imagine Lithium's long position.Apple vs. Titanium Transportation Group | Apple vs. E L Financial Corp | Apple vs. Canadian Imperial Bank | Apple vs. Queens Road Capital |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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