Correlation Between Apple and IRONBARK ZINC

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

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

Diversification Opportunities for Apple and IRONBARK ZINC

-0.24

Correlation Coefficient

Apple  IRONBARK ZINC

Very good diversification

The 3 months correlation between Apple and IRONBARK is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and IRONBARK ZINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRONBARK ZINC 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 IRONBARK ZINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRONBARK ZINC has no effect on the direction of Apple i.e., Apple and IRONBARK ZINC go up and down completely randomly.

Pair Corralation between Apple and IRONBARK ZINC

Assuming the 90 days trading horizon Apple is expected to generate 6.12 times less return on investment than IRONBARK ZINC. But when comparing it to its historical volatility, Apple Inc is 11.03 times less risky than IRONBARK ZINC. It trades about 0.1 of its potential returns per unit of risk. IRONBARK ZINC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.15  in IRONBARK ZINC on September 21, 2024 and sell it today you would lose (0.05) from holding IRONBARK ZINC or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.22%
Values	Daily Returns

Apple Inc  vs.  IRONBARK ZINC

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.

IRONBARK ZINC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IRONBARK ZINC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, IRONBARK ZINC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and IRONBARK ZINC

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

The idea behind Apple Inc and IRONBARK ZINC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.