Correlation Between Apple and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both Apple and Fortune Brands 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 Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Fortune Brands Home, you can compare the effects of market volatilities on Apple and Fortune Brands 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 Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Fortune Brands.
Diversification Opportunities for Apple and Fortune Brands
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Apple and Fortune is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home 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 Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of Apple i.e., Apple and Fortune Brands go up and down completely randomly.
Pair Corralation between Apple and Fortune Brands
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.74 times more return on investment than Fortune Brands. However, Apple Inc is 1.34 times less risky than Fortune Brands. It trades about 0.08 of its potential returns per unit of risk. Fortune Brands Home is currently generating about 0.03 per unit of risk. If you would invest 14,041 in Apple Inc on October 23, 2024 and sell it today you would earn a total of 8,204 from holding Apple Inc or generate 58.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 99.79% |
Values | Daily Returns |
Apple Inc vs. Fortune Brands Home
Performance |
Timeline |
Apple Inc |
Fortune Brands Home |
Apple and Fortune Brands Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Apple and Fortune Brands
The main advantage of trading using opposite Apple and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.Apple vs. Globex Mining Enterprises | Apple vs. Perseus Mining Limited | Apple vs. MAG SILVER | Apple vs. TRI CHEMICAL LABORATINC |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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