Correlation Between Apple and Imperial Metals

Can any of the company-specific risk be diversified away by investing in both Apple and Imperial Metals 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 Imperial Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and Imperial Metals, you can compare the effects of market volatilities on Apple and Imperial Metals 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 Imperial Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Imperial Metals.

Diversification Opportunities for Apple and Imperial Metals

-0.48

Correlation Coefficient

Apple  Imperial Metals

Very good diversification

The 3 months correlation between Apple and Imperial is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Imperial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Metals 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 are associated (or correlated) with Imperial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Metals has no effect on the direction of Apple i.e., Apple and Imperial Metals go up and down completely randomly.

Pair Corralation between Apple and Imperial Metals

Given the investment horizon of 90 days Apple Inc is expected to generate 0.44 times more return on investment than Imperial Metals. However, Apple Inc is 2.26 times less risky than Imperial Metals. It trades about 0.11 of its potential returns per unit of risk. Imperial Metals is currently generating about 0.02 per unit of risk. If you would invest  12,858  in Apple Inc on September 20, 2024 and sell it today you would earn a total of  12,490  from holding Apple Inc or generate 97.14% return on investment over 90 days.

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

Apple Inc  vs.  Imperial Metals

Apple Inc

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Imperial Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imperial Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Apple and Imperial Metals

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

The idea behind Apple Inc and Imperial Metals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.