Correlation Between Apple and Morguard

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

Diversification Opportunities for Apple and Morguard

-0.36

Correlation Coefficient

Apple  Morguard

Very good diversification

The 3 months correlation between Apple and Morguard is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Morguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morguard 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 Morguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morguard has no effect on the direction of Apple i.e., Apple and Morguard go up and down completely randomly.

Pair Corralation between Apple and Morguard

Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.78 times more return on investment than Morguard. However, Apple Inc CDR is 1.28 times less risky than Morguard. It trades about 0.21 of its potential returns per unit of risk. Morguard is currently generating about -0.09 per unit of risk. If you would invest  3,265  in Apple Inc CDR on October 7, 2024 and sell it today you would earn a total of  298.00  from holding Apple Inc CDR or generate 9.13% 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.  Morguard

Apple Inc CDR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Morguard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morguard has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Apple and Morguard

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

The idea behind Apple Inc CDR and Morguard 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.