Correlation Between Apple and ChampionX
Can any of the company-specific risk be diversified away by investing in both Apple and ChampionX 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 ChampionX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and ChampionX, you can compare the effects of market volatilities on Apple and ChampionX 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 ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and ChampionX.
Diversification Opportunities for Apple and ChampionX
Poor diversification
The 3 months correlation between Apple and ChampionX is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX 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 ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of Apple i.e., Apple and ChampionX go up and down completely randomly.
Pair Corralation between Apple and ChampionX
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.72 times more return on investment than ChampionX. However, Apple Inc is 1.4 times less risky than ChampionX. It trades about 0.09 of its potential returns per unit of risk. ChampionX is currently generating about -0.01 per unit of risk. If you would invest 16,004 in Apple Inc on September 12, 2024 and sell it today you would earn a total of 7,436 from holding Apple Inc or generate 46.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Apple Inc vs. ChampionX
Performance |
Timeline |
Apple Inc |
ChampionX |
Apple and ChampionX Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Apple and ChampionX
The main advantage of trading using opposite Apple and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, ChampionX 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 ChampionX will offset losses from the drop in ChampionX's long position.Apple vs. JAPAN AIRLINES | Apple vs. Gol Intelligent Airlines | Apple vs. BOS BETTER ONLINE | Apple vs. YATRA ONLINE DL 0001 |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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