Correlation Between Charter Communications and APA
Can any of the company-specific risk be diversified away by investing in both Charter Communications and APA 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 Charter Communications and APA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and APA Corporation, you can compare the effects of market volatilities on Charter Communications and APA 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 Charter Communications with a short position of APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and APA.
Diversification Opportunities for Charter Communications and APA
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Charter and APA is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation and Charter Communications 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 Charter Communications are associated (or correlated) with APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of Charter Communications i.e., Charter Communications and APA go up and down completely randomly.
Pair Corralation between Charter Communications and APA
Assuming the 90 days trading horizon Charter Communications is expected to under-perform the APA. But the stock apears to be less risky and, when comparing its historical volatility, Charter Communications is 1.75 times less risky than APA. The stock trades about -0.16 of its potential returns per unit of risk. The APA Corporation is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 13,598 in APA Corporation on October 10, 2024 and sell it today you would earn a total of 1,030 from holding APA Corporation or generate 7.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Charter Communications vs. APA Corp.
Performance |
Timeline |
Charter Communications |
APA Corporation |
Charter Communications and APA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Charter Communications and APA
The main advantage of trading using opposite Charter Communications and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.Charter Communications vs. Pentair plc | Charter Communications vs. Costco Wholesale | Charter Communications vs. Omega Healthcare Investors, | Charter Communications vs. Healthpeak Properties |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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