Correlation Between Apple and Truxton
Can any of the company-specific risk be diversified away by investing in both Apple and Truxton 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 Truxton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Truxton, you can compare the effects of market volatilities on Apple and Truxton 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 Truxton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Truxton.
Diversification Opportunities for Apple and Truxton
Poor diversification
The 3 months correlation between Apple and Truxton is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Truxton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truxton 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 Truxton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truxton has no effect on the direction of Apple i.e., Apple and Truxton go up and down completely randomly.
Pair Corralation between Apple and Truxton
Given the investment horizon of 90 days Apple Inc is expected to generate 0.58 times more return on investment than Truxton. However, Apple Inc is 1.71 times less risky than Truxton. It trades about 0.1 of its potential returns per unit of risk. Truxton is currently generating about 0.03 per unit of risk. If you would invest 13,386 in Apple Inc on October 10, 2024 and sell it today you would earn a total of 10,884 from holding Apple Inc or generate 81.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 89.52% |
Values | Daily Returns |
Apple Inc vs. Truxton
Performance |
Timeline |
Apple Inc |
Truxton |
Apple and Truxton Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Apple and Truxton
The main advantage of trading using opposite Apple and Truxton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Truxton 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 Truxton will offset losses from the drop in Truxton's long position.The idea behind Apple Inc and Truxton 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.Truxton vs. Eurobank Ergasias Services | Truxton vs. Standard Bank Group | Truxton vs. Bank Central Asia | Truxton vs. PSB Holdings |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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