Correlation Between Apple and Insulet Corp

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

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

Diversification Opportunities for Apple and Insulet Corp

0.73

Correlation Coefficient

Apple  Insulet Corp

Poor diversification

The 3 months correlation between Apple and Insulet is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Insulet Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insulet 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 Insulet Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insulet Corp has no effect on the direction of Apple i.e., Apple and Insulet Corp go up and down completely randomly.

Pair Corralation between Apple and Insulet Corp

Assuming the 90 days trading horizon Apple is expected to generate 3.33 times less return on investment than Insulet Corp. But when comparing it to its historical volatility, Apple Inc is 1.61 times less risky than Insulet Corp. It trades about 0.05 of its potential returns per unit of risk. Insulet Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  24,880  in Insulet Corp on October 10, 2024 and sell it today you would earn a total of  660.00  from holding Insulet Corp or generate 2.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

Apple Inc  vs.  Insulet Corp

Apple Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

Insulet Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Insulet Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Insulet Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Insulet Corp

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

The idea behind Apple Inc and Insulet 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.