Correlation Between Apple and REVLTNRY CNCPT

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

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

Diversification Opportunities for Apple and REVLTNRY CNCPT

-0.08

Correlation Coefficient

Apple  REVLTNRY CNCPT

Good diversification

The 3 months correlation between Apple and REVLTNRY is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and REVLTNRY CNCPT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVLTNRY CNCPT 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 REVLTNRY CNCPT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVLTNRY CNCPT has no effect on the direction of Apple i.e., Apple and REVLTNRY CNCPT go up and down completely randomly.

Pair Corralation between Apple and REVLTNRY CNCPT

Assuming the 90 days trading horizon Apple is expected to generate 146.51 times less return on investment than REVLTNRY CNCPT. But when comparing it to its historical volatility, Apple Inc is 161.51 times less risky than REVLTNRY CNCPT. It trades about 0.21 of its potential returns per unit of risk. REVLTNRY CNCPT is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.50  in REVLTNRY CNCPT on September 23, 2024 and sell it today you would earn a total of  0.05  from holding REVLTNRY CNCPT or generate 10.0% 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.  REVLTNRY CNCPT

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 unsteady fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

REVLTNRY CNCPT

Risk-Adjusted Performance

15 of 100

Good

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

Pair Trading with Apple and REVLTNRY CNCPT

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

The idea behind Apple Inc and REVLTNRY CNCPT 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.