Correlation Between Flowers Foods and Apple

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

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

Diversification Opportunities for Flowers Foods and Apple

-0.23

Correlation Coefficient

Flowers Foods  Apple

Very good diversification

The 3 months correlation between Flowers and Apple is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Flowers Foods 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 Flowers Foods 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 Flowers Foods i.e., Flowers Foods and Apple go up and down completely randomly.

Pair Corralation between Flowers Foods and Apple

Assuming the 90 days horizon Flowers Foods is expected to under-perform the Apple. In addition to that, Flowers Foods is 1.1 times more volatile than Apple Inc. It trades about -0.08 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.0 per unit of volatility. If you would invest  21,564  in Apple Inc on October 26, 2024 and sell it today you would lose (184.00) from holding Apple Inc or give up 0.85% of portfolio value over 90 days.

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

Flowers Foods  vs.  Apple Inc

Flowers Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Apple is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Flowers Foods and Apple

The main advantage of trading using opposite Flowers Foods and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowers Foods 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 Flowers Foods 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.