Correlation Between Apple and INTERNATIONAL METALS

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

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

Diversification Opportunities for Apple and INTERNATIONAL METALS

0.25

Correlation Coefficient

Apple  INTERNATIONAL METALS

Modest diversification

The 3 months correlation between Apple and INTERNATIONAL is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and INTERNATIONAL METALS MIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNATIONAL METALS MIN 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 INTERNATIONAL METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNATIONAL METALS MIN has no effect on the direction of Apple i.e., Apple and INTERNATIONAL METALS go up and down completely randomly.

Pair Corralation between Apple and INTERNATIONAL METALS

Assuming the 90 days trading horizon Apple is expected to generate 203.26 times less return on investment than INTERNATIONAL METALS. But when comparing it to its historical volatility, Apple Inc is 115.63 times less risky than INTERNATIONAL METALS. It trades about 0.1 of its potential returns per unit of risk. INTERNATIONAL METALS MIN is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  8.80  in INTERNATIONAL METALS MIN on September 21, 2024 and sell it today you would lose (7.40) from holding INTERNATIONAL METALS MIN or give up 84.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Apple Inc  vs.  INTERNATIONAL METALS MIN

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 fragile fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

INTERNATIONAL METALS MIN

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in INTERNATIONAL METALS MIN are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, INTERNATIONAL METALS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and INTERNATIONAL METALS

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

The idea behind Apple Inc and INTERNATIONAL METALS MIN 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.