Correlation Between Apple and ABN AMRO

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

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

Diversification Opportunities for Apple and ABN AMRO

-0.78

Correlation Coefficient

Apple  ABN AMRO

Pay attention - limited upside

The 3 months correlation between Apple and ABN is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ABN AMRO Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABN AMRO Bank 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 ABN AMRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABN AMRO Bank has no effect on the direction of Apple i.e., Apple and ABN AMRO go up and down completely randomly.

Pair Corralation between Apple and ABN AMRO

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.9 times more return on investment than ABN AMRO. However, Apple Inc is 1.11 times less risky than ABN AMRO. It trades about 0.24 of its potential returns per unit of risk. ABN AMRO Bank is currently generating about -0.13 per unit of risk. If you would invest  20,740  in Apple Inc on September 28, 2024 and sell it today you would earn a total of  3,695  from holding Apple Inc or generate 17.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Apple Inc  vs.  ABN AMRO Bank

Apple Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

ABN AMRO Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABN AMRO Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Apple and ABN AMRO

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

The idea behind Apple Inc and ABN AMRO Bank 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.