Correlation Between Beyond Oil and Apple

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

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

Diversification Opportunities for Beyond Oil and Apple

-0.14

Correlation Coefficient

Beyond Oil  Apple

Good diversification

The 3 months correlation between Beyond and Apple is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Oil and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Beyond Oil 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 Beyond Oil are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Beyond Oil i.e., Beyond Oil and Apple go up and down completely randomly.

Pair Corralation between Beyond Oil and Apple

Assuming the 90 days horizon Beyond Oil is expected to under-perform the Apple. In addition to that, Beyond Oil is 1.59 times more volatile than Apple Inc. It trades about -0.37 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.01 per unit of volatility. If you would invest  24,301  in Apple Inc on October 5, 2024 and sell it today you would earn a total of  35.00  from holding Apple Inc or generate 0.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Beyond Oil  vs.  Apple Inc

Beyond Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beyond Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Apple Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Beyond Oil and Apple

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

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