Correlation Between Apple and MARKET VECTR

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

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

Diversification Opportunities for Apple and MARKET VECTR

0.65

Correlation Coefficient

Apple  MARKET VECTR

Poor diversification

The 3 months correlation between Apple and MARKET is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and MARKET VECTR RETAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARKET VECTR RETAIL 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 MARKET VECTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARKET VECTR RETAIL has no effect on the direction of Apple i.e., Apple and MARKET VECTR go up and down completely randomly.

Pair Corralation between Apple and MARKET VECTR

Assuming the 90 days trading horizon Apple Inc is expected to under-perform the MARKET VECTR. In addition to that, Apple is 2.06 times more volatile than MARKET VECTR RETAIL. It trades about -0.13 of its total potential returns per unit of risk. MARKET VECTR RETAIL is currently generating about -0.08 per unit of volatility. If you would invest  21,650  in MARKET VECTR RETAIL on December 30, 2024 and sell it today you would lose (1,050) from holding MARKET VECTR RETAIL or give up 4.85% 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.  MARKET VECTR RETAIL

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MARKET VECTR RETAIL

Risk-Adjusted Performance

Very Weak

Over the last 90 days MARKET VECTR RETAIL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, MARKET VECTR is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Apple and MARKET VECTR

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

The idea behind Apple Inc and MARKET VECTR RETAIL 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.