Correlation Between Parkland Fuel and Apple

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

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

Diversification Opportunities for Parkland Fuel and Apple

0.57

Correlation Coefficient

Parkland Fuel  Apple

Very weak diversification

The 3 months correlation between Parkland and Apple is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Parkland Fuel and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR and Parkland Fuel 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 Parkland Fuel 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 CDR has no effect on the direction of Parkland Fuel i.e., Parkland Fuel and Apple go up and down completely randomly.

Pair Corralation between Parkland Fuel and Apple

Assuming the 90 days trading horizon Parkland Fuel is expected to generate 3.34 times less return on investment than Apple. In addition to that, Parkland Fuel is 1.33 times more volatile than Apple Inc CDR. It trades about 0.03 of its total potential returns per unit of risk. Apple Inc CDR is currently generating about 0.14 per unit of volatility. If you would invest  3,269  in Apple Inc CDR on September 13, 2024 and sell it today you would earn a total of  343.00  from holding Apple Inc CDR or generate 10.49% return on investment over 90 days.

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

Parkland Fuel  vs.  Apple Inc CDR

Parkland Fuel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parkland Fuel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Parkland Fuel is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Apple Inc CDR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Parkland Fuel and Apple

The main advantage of trading using opposite Parkland Fuel and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parkland Fuel 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 Parkland Fuel and Apple Inc CDR 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.