Correlation Between Apple and PMI

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

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

Diversification Opportunities for Apple and PMI

-0.75

Correlation Coefficient

Apple  PMI

Pay attention - limited upside

The 3 months correlation between Apple and PMI is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and The PMI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PMI Group 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 PMI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PMI Group has no effect on the direction of Apple i.e., Apple and PMI go up and down completely randomly.

Pair Corralation between Apple and PMI

Given the investment horizon of 90 days Apple Inc is expected to generate 0.06 times more return on investment than PMI. However, Apple Inc is 17.4 times less risky than PMI. It trades about 0.01 of its potential returns per unit of risk. The PMI Group is currently generating about -0.22 per unit of risk. If you would invest  24,284  in Apple Inc on October 7, 2024 and sell it today you would earn a total of  52.00  from holding Apple Inc or generate 0.21% return on investment over 90 days.

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

Apple Inc  vs.  The PMI Group

Apple Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 11 (%) 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 February 2025.

PMI Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The PMI Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Apple and PMI

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

The idea behind Apple Inc and The PMI Group 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.