Correlation Between Apple and NEW MILLENNIUM

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

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

Diversification Opportunities for Apple and NEW MILLENNIUM

-0.03

Correlation Coefficient

Apple  NEW MILLENNIUM

Good diversification

The 3 months correlation between Apple and NEW is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and NEW MILLENNIUM IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW MILLENNIUM IRON 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 NEW MILLENNIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW MILLENNIUM IRON has no effect on the direction of Apple i.e., Apple and NEW MILLENNIUM go up and down completely randomly.

Pair Corralation between Apple and NEW MILLENNIUM

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.44 times more return on investment than NEW MILLENNIUM. However, Apple Inc is 2.26 times less risky than NEW MILLENNIUM. It trades about 0.39 of its potential returns per unit of risk. NEW MILLENNIUM IRON is currently generating about -0.03 per unit of risk. If you would invest  20,370  in Apple Inc on October 6, 2024 and sell it today you would earn a total of  3,225  from holding Apple Inc or generate 15.83% return on investment over 90 days.

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

Apple Inc  vs.  NEW MILLENNIUM IRON

Apple Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

NEW MILLENNIUM IRON

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NEW MILLENNIUM IRON are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, NEW MILLENNIUM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Apple and NEW MILLENNIUM

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

The idea behind Apple Inc and NEW MILLENNIUM IRON 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.