Correlation Between Apple and Gen Digital
Can any of the company-specific risk be diversified away by investing in both Apple and Gen Digital 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 Gen Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Gen Digital, you can compare the effects of market volatilities on Apple and Gen Digital 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 Gen Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Gen Digital.
Diversification Opportunities for Apple and Gen Digital
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and Gen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Gen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gen Digital 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 Gen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gen Digital has no effect on the direction of Apple i.e., Apple and Gen Digital go up and down completely randomly.
Pair Corralation between Apple and Gen Digital
Assuming the 90 days trading horizon Apple Inc is expected to under-perform the Gen Digital. In addition to that, Apple is 2.95 times more volatile than Gen Digital. It trades about -0.17 of its total potential returns per unit of risk. Gen Digital is currently generating about -0.12 per unit of volatility. If you would invest 17,839 in Gen Digital on December 30, 2024 and sell it today you would lose (839.00) from holding Gen Digital or give up 4.7% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Apple Inc vs. Gen Digital
Performance |
Timeline |
Apple Inc |
Gen Digital |
Apple and Gen Digital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Apple and Gen Digital
The main advantage of trading using opposite Apple and Gen Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Gen Digital 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 Gen Digital will offset losses from the drop in Gen Digital's long position.Apple vs. G2D Investments | Apple vs. STMicroelectronics NV | Apple vs. Check Point Software | Apple vs. Nordon Indstrias Metalrgicas |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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