Correlation Between Apple and Graham

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

By analyzing existing cross correlation between Apple Inc and Graham Holdings 575, you can compare the effects of market volatilities on Apple and Graham 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 Graham. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Graham.

Diversification Opportunities for Apple and Graham

-0.41

Correlation Coefficient

Apple  Graham

Very good diversification

The 3 months correlation between Apple and Graham is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Graham Holdings 575 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings 575 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 Graham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings 575 has no effect on the direction of Apple i.e., Apple and Graham go up and down completely randomly.

Pair Corralation between Apple and Graham

Given the investment horizon of 90 days Apple Inc is expected to generate 3.59 times more return on investment than Graham. However, Apple is 3.59 times more volatile than Graham Holdings 575. It trades about 0.15 of its potential returns per unit of risk. Graham Holdings 575 is currently generating about -0.04 per unit of risk. If you would invest  22,145  in Apple Inc on October 5, 2024 and sell it today you would earn a total of  2,240  from holding Apple Inc or generate 10.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	61.29%
Values	Daily Returns

Apple Inc  vs.  Graham Holdings 575

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.

Graham Holdings 575

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graham Holdings 575 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Graham is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Apple and Graham

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

The idea behind Apple Inc and Graham Holdings 575 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.