Correlation Between SP Merval and Apple

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

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

Diversification Opportunities for SP Merval and Apple

0.0

Correlation Coefficient

SP Merval  Apple

Pay attention - limited upside

The 3 months correlation between MERV and Apple is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SP Merval and Apple Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc DRC and SP Merval 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 SP Merval 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 DRC has no effect on the direction of SP Merval i.e., SP Merval and Apple go up and down completely randomly.

Pair Corralation between SP Merval and Apple

If you would invest  1,302,500  in Apple Inc DRC on September 14, 2024 and sell it today you would earn a total of  27,500  from holding Apple Inc DRC or generate 2.11% return on investment over 90 days.

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

SP Merval  vs.  Apple Inc DRC

Pair Trading with SP Merval and Apple

The main advantage of trading using opposite SP Merval and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Merval 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 SP Merval and Apple Inc DRC 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 Transaction History module to view history of all your transactions and understand their impact on performance.