Correlation Between Apple and InPlay Oil

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

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

Diversification Opportunities for Apple and InPlay Oil

0.52

Correlation Coefficient

Apple  InPlay Oil

Very weak diversification

The 3 months correlation between Apple and InPlay is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp 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 InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Apple i.e., Apple and InPlay Oil go up and down completely randomly.

Pair Corralation between Apple and InPlay Oil

Assuming the 90 days trading horizon Apple Inc is expected to under-perform the InPlay Oil. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 1.49 times less risky than InPlay Oil. The stock trades about -0.14 of its potential returns per unit of risk. The InPlay Oil Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  102.00  in InPlay Oil Corp on December 30, 2024 and sell it today you would earn a total of  2.00  from holding InPlay Oil Corp or generate 1.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  InPlay Oil Corp

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. Despite fragile performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

InPlay Oil Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in InPlay Oil Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, InPlay Oil is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apple and InPlay Oil

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

The idea behind Apple Inc and InPlay Oil Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.