Correlation Between Apple and Grounds Real

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

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

Diversification Opportunities for Apple and Grounds Real

0.09

Correlation Coefficient

Apple  Grounds Real

Significant diversification

The 3 months correlation between Apple and Grounds is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Grounds Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grounds Real Estate 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 Grounds Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grounds Real Estate has no effect on the direction of Apple i.e., Apple and Grounds Real go up and down completely randomly.

Pair Corralation between Apple and Grounds Real

Assuming the 90 days trading horizon Apple is expected to generate 183.16 times less return on investment than Grounds Real. But when comparing it to its historical volatility, Apple Inc is 115.54 times less risky than Grounds Real. It trades about 0.1 of its potential returns per unit of risk. Grounds Real Estate is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,560,000  in Grounds Real Estate on October 18, 2024 and sell it today you would lose (710,000) from holding Grounds Real Estate or give up 45.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.38%
Values	Daily Returns

Apple Inc  vs.  Grounds Real Estate

Apple Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Grounds Real Estate

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Grounds Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile basic indicators, Grounds Real exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Grounds Real

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

The idea behind Apple Inc and Grounds Real Estate 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.