Correlation Between Apple and Wolters Kluwers

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

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

Diversification Opportunities for Apple and Wolters Kluwers

0.26

Correlation Coefficient

Apple  Wolters Kluwers

Modest diversification

The 3 months correlation between Apple and Wolters is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Wolters Kluwers Nv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolters Kluwers Nv 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 Wolters Kluwers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolters Kluwers Nv has no effect on the direction of Apple i.e., Apple and Wolters Kluwers go up and down completely randomly.

Pair Corralation between Apple and Wolters Kluwers

Assuming the 90 days trading horizon Apple is expected to generate 63.7 times less return on investment than Wolters Kluwers. But when comparing it to its historical volatility, Apple Inc is 1.03 times less risky than Wolters Kluwers. It trades about 0.0 of its potential returns per unit of risk. Wolters Kluwers Nv is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  15,870  in Wolters Kluwers Nv on October 25, 2024 and sell it today you would earn a total of  1,335  from holding Wolters Kluwers Nv or generate 8.41% return on investment over 90 days.

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

Apple Inc  vs.  Wolters Kluwers Nv

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Apple is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Wolters Kluwers Nv

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wolters Kluwers Nv are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, Wolters Kluwers may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Apple and Wolters Kluwers

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

The idea behind Apple Inc and Wolters Kluwers Nv 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.