Correlation Between Apple and VersaBank

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

Diversification Opportunities for Apple and VersaBank

-0.25

Correlation Coefficient

Apple  VersaBank

Very good diversification

The 3 months correlation between Apple and VersaBank is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and VersaBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VersaBank 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 VersaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VersaBank has no effect on the direction of Apple i.e., Apple and VersaBank go up and down completely randomly.

Pair Corralation between Apple and VersaBank

Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.39 times more return on investment than VersaBank. However, Apple Inc CDR is 2.57 times less risky than VersaBank. It trades about 0.08 of its potential returns per unit of risk. VersaBank is currently generating about 0.02 per unit of risk. If you would invest  3,365  in Apple Inc CDR on October 10, 2024 and sell it today you would earn a total of  179.00  from holding Apple Inc CDR or generate 5.32% 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.  VersaBank

Apple Inc CDR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Apple is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

VersaBank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VersaBank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, VersaBank is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Apple and VersaBank

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

The idea behind Apple Inc CDR and VersaBank 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.