Correlation Between Apple and CyberAgent
Can any of the company-specific risk be diversified away by investing in both Apple and CyberAgent 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 CyberAgent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and CyberAgent, you can compare the effects of market volatilities on Apple and CyberAgent 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 CyberAgent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and CyberAgent.
Diversification Opportunities for Apple and CyberAgent
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and CyberAgent is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and CyberAgent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberAgent 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 CyberAgent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberAgent has no effect on the direction of Apple i.e., Apple and CyberAgent go up and down completely randomly.
Pair Corralation between Apple and CyberAgent
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.61 times more return on investment than CyberAgent. However, Apple Inc is 1.64 times less risky than CyberAgent. It trades about 0.53 of its potential returns per unit of risk. CyberAgent is currently generating about 0.21 per unit of risk. If you would invest 21,910 in Apple Inc on September 25, 2024 and sell it today you would earn a total of 2,600 from holding Apple Inc or generate 11.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Apple Inc vs. CyberAgent
Performance |
Timeline |
Apple Inc |
CyberAgent |
Apple and CyberAgent Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Apple and CyberAgent
The main advantage of trading using opposite Apple and CyberAgent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, CyberAgent 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 CyberAgent will offset losses from the drop in CyberAgent's long position.Apple vs. STMICROELECTRONICS | Apple vs. LPKF Laser Electronics | Apple vs. KIMBALL ELECTRONICS | Apple vs. AOI Electronics Co |
CyberAgent vs. Publicis Groupe SA | CyberAgent vs. Omnicom Group | CyberAgent vs. WPP PLC | CyberAgent vs. WPP PLC ADR |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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