Correlation Between Apple and Nasdaq 100

Can any of the company-specific risk be diversified away by investing in both Apple and Nasdaq 100 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 Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and Nasdaq 100, you can compare the effects of market volatilities on Apple and Nasdaq 100 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 Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Nasdaq 100.

Diversification Opportunities for Apple and Nasdaq 100

0.78

Correlation Coefficient

Apple  Nasdaq 100

Poor diversification

The 3 months correlation between Apple and Nasdaq is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 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 Nasdaq 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 has no effect on the direction of Apple i.e., Apple and Nasdaq 100 go up and down completely randomly.

Pair Corralation between Apple and Nasdaq 100

Given the investment horizon of 90 days Apple Inc is expected to generate 1.17 times more return on investment than Nasdaq 100. However, Apple is 1.17 times more volatile than Nasdaq 100. It trades about 0.11 of its potential returns per unit of risk. Nasdaq 100 is currently generating about 0.13 per unit of risk. If you would invest  12,827  in Apple Inc on September 27, 2024 and sell it today you would earn a total of  12,993  from holding Apple Inc or generate 101.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Apple Inc  vs.  Nasdaq 100

Pair Trading with Apple and Nasdaq 100

The main advantage of trading using opposite Apple and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Nasdaq 100 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 Nasdaq 100 will offset losses from the drop in Nasdaq 100's long position.

The idea behind Apple Inc and Nasdaq 100 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.