Correlation Between Apple and 90041LAF2

Can any of the company-specific risk be diversified away by investing in both Apple and 90041LAF2 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 90041LAF2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and US90041LAF22, you can compare the effects of market volatilities on Apple and 90041LAF2 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 90041LAF2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and 90041LAF2.

Diversification Opportunities for Apple and 90041LAF2

-0.28

Correlation Coefficient

Apple  90041LAF2

Very good diversification

The 3 months correlation between Apple and 90041LAF2 is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and US90041LAF22 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US90041LAF22 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 90041LAF2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US90041LAF22 has no effect on the direction of Apple i.e., Apple and 90041LAF2 go up and down completely randomly.

Pair Corralation between Apple and 90041LAF2

Given the investment horizon of 90 days Apple Inc is expected to generate 5.21 times more return on investment than 90041LAF2. However, Apple is 5.21 times more volatile than US90041LAF22. It trades about 0.25 of its potential returns per unit of risk. US90041LAF22 is currently generating about -0.07 per unit of risk. If you would invest  23,959  in Apple Inc on October 2, 2024 and sell it today you would earn a total of  1,261  from holding Apple Inc or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	57.14%
Values	Daily Returns

Apple Inc  vs.  US90041LAF22

Apple Inc

Risk-Adjusted Performance

12 of 100

Good

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.

US90041LAF22

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US90041LAF22 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 90041LAF2 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Apple and 90041LAF2

The main advantage of trading using opposite Apple and 90041LAF2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, 90041LAF2 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 90041LAF2 will offset losses from the drop in 90041LAF2's long position.

The idea behind Apple Inc and US90041LAF22 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.