Correlation Between IPC MEXICO and Apple

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

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

Diversification Opportunities for IPC MEXICO and Apple

-0.29

Correlation Coefficient

IPC MEXICO  Apple

Very good diversification

The 3 months correlation between IPC and Apple is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding IPC MEXICO and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and IPC MEXICO 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 IPC MEXICO 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 IPC MEXICO i.e., IPC MEXICO and Apple go up and down completely randomly.

Pair Corralation between IPC MEXICO and Apple

Assuming the 90 days trading horizon IPC MEXICO is expected to generate 0.52 times more return on investment than Apple. However, IPC MEXICO is 1.92 times less risky than Apple. It trades about 0.06 of its potential returns per unit of risk. Apple Inc is currently generating about 0.02 per unit of risk. If you would invest  5,082,806  in IPC MEXICO on December 1, 2024 and sell it today you would earn a total of  154,896  from holding IPC MEXICO or generate 3.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

IPC MEXICO  vs.  Apple Inc

Pair Trading with IPC MEXICO and Apple

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