Correlation Between Data Storage and Apple

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

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

Diversification Opportunities for Data Storage and Apple

0.42

Correlation Coefficient

Data Storage  Apple

Very weak diversification

The 3 months correlation between Data and Apple is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Data Storage and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Data Storage 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 Data Storage 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 Data Storage i.e., Data Storage and Apple go up and down completely randomly.

Pair Corralation between Data Storage and Apple

Assuming the 90 days horizon Data Storage is expected to generate 12.6 times more return on investment than Apple. However, Data Storage is 12.6 times more volatile than Apple Inc. It trades about 0.05 of its potential returns per unit of risk. Apple Inc is currently generating about -0.15 per unit of risk. If you would invest  66.00  in Data Storage on October 12, 2024 and sell it today you would lose (6.00) from holding Data Storage or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Data Storage  vs.  Apple Inc

Data Storage

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Data Storage are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Data Storage showed solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Apple is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Data Storage and Apple

The main advantage of trading using opposite Data Storage and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data Storage 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 Data Storage 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.