Correlation Between Apple and NEWFOUNDLAND DISCOVCORP

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

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

Diversification Opportunities for Apple and NEWFOUNDLAND DISCOVCORP

0.07

Correlation Coefficient

Apple  NEWFOUNDLAND DISCOVCORP

Significant diversification

The 3 months correlation between Apple and NEWFOUNDLAND is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and NEWFOUNDLAND DISCOVCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWFOUNDLAND DISCOVCORP 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 NEWFOUNDLAND DISCOVCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWFOUNDLAND DISCOVCORP has no effect on the direction of Apple i.e., Apple and NEWFOUNDLAND DISCOVCORP go up and down completely randomly.

Pair Corralation between Apple and NEWFOUNDLAND DISCOVCORP

Assuming the 90 days trading horizon Apple is expected to generate 151.33 times less return on investment than NEWFOUNDLAND DISCOVCORP. But when comparing it to its historical volatility, Apple Inc is 81.96 times less risky than NEWFOUNDLAND DISCOVCORP. It trades about 0.14 of its potential returns per unit of risk. NEWFOUNDLAND DISCOVCORP is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  3.00  in NEWFOUNDLAND DISCOVCORP on September 27, 2024 and sell it today you would earn a total of  0.66  from holding NEWFOUNDLAND DISCOVCORP or generate 22.0% return on investment over 90 days.

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

Apple Inc  vs.  NEWFOUNDLAND DISCOVCORP

Apple Inc

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

NEWFOUNDLAND DISCOVCORP

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NEWFOUNDLAND DISCOVCORP are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, NEWFOUNDLAND DISCOVCORP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and NEWFOUNDLAND DISCOVCORP

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

The idea behind Apple Inc and NEWFOUNDLAND DISCOVCORP 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.