Correlation Between Apple and Journey Energy
Can any of the company-specific risk be diversified away by investing in both Apple and Journey Energy 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 Journey Energy 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 Journey Energy, you can compare the effects of market volatilities on Apple and Journey Energy 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 Journey Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Journey Energy.
Diversification Opportunities for Apple and Journey Energy
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Apple and Journey is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Journey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Journey Energy 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 Journey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Journey Energy has no effect on the direction of Apple i.e., Apple and Journey Energy go up and down completely randomly.
Pair Corralation between Apple and Journey Energy
Assuming the 90 days trading horizon Apple Inc CDR is expected to under-perform the Journey Energy. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc CDR is 3.01 times less risky than Journey Energy. The stock trades about -0.03 of its potential returns per unit of risk. The Journey Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 211.00 in Journey Energy on October 9, 2024 and sell it today you would earn a total of 3.00 from holding Journey Energy or generate 1.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Apple Inc CDR vs. Journey Energy
Performance |
Timeline |
Apple Inc CDR |
Journey Energy |
Apple and Journey Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Apple and Journey Energy
The main advantage of trading using opposite Apple and Journey Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Journey Energy 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 Journey Energy will offset losses from the drop in Journey Energy's long position.Apple vs. Caribbean Utilities | Apple vs. Earth Alive Clean | Apple vs. Mako Mining Corp | Apple vs. Globex Mining Enterprises |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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