Correlation Between Charter Communications and Apple

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

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

Diversification Opportunities for Charter Communications and Apple

0.46

Correlation Coefficient

Charter Communications  Apple

Very weak diversification

The 3 months correlation between Charter and Apple is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 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 Charter Communications i.e., Charter Communications and Apple go up and down completely randomly.

Pair Corralation between Charter Communications and Apple

Assuming the 90 days trading horizon Charter Communications is expected to under-perform the Apple. In addition to that, Charter Communications is 1.4 times more volatile than Apple Inc. It trades about -0.07 of its total potential returns per unit of risk. Apple Inc is currently generating about -0.02 per unit of volatility. If you would invest  7,262  in Apple Inc on December 5, 2024 and sell it today you would lose (232.00) from holding Apple Inc or give up 3.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Charter Communications  vs.  Apple Inc

Charter Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charter Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Apple is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Charter Communications and Apple

The main advantage of trading using opposite Charter Communications and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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 Charter Communications 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.