Correlation Between Apple and ImagineAR

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

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

Diversification Opportunities for Apple and ImagineAR

-0.17

Correlation Coefficient

Apple  ImagineAR

Good diversification

The 3 months correlation between Apple and ImagineAR is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ImagineAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImagineAR 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 ImagineAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImagineAR has no effect on the direction of Apple i.e., Apple and ImagineAR go up and down completely randomly.

Pair Corralation between Apple and ImagineAR

Assuming the 90 days trading horizon Apple is expected to generate 6.17 times less return on investment than ImagineAR. But when comparing it to its historical volatility, Apple Inc is 6.75 times less risky than ImagineAR. It trades about 0.12 of its potential returns per unit of risk. ImagineAR is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.85  in ImagineAR on September 23, 2024 and sell it today you would earn a total of  2.45  from holding ImagineAR or generate 132.43% 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.  ImagineAR

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.

ImagineAR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ImagineAR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, ImagineAR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and ImagineAR

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

The idea behind Apple Inc and ImagineAR 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.