Correlation Between AUTONATION and Apple

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

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

Diversification Opportunities for AUTONATION and Apple

0.81

Correlation Coefficient

AUTONATION  Apple

Very poor diversification

The 3 months correlation between AUTONATION and Apple is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding AUTONATION and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and AUTONATION 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 AUTONATION 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 AUTONATION i.e., AUTONATION and Apple go up and down completely randomly.

Pair Corralation between AUTONATION and Apple

If you would invest  21,245  in Apple Inc on October 24, 2024 and sell it today you would earn a total of  65.00  from holding Apple Inc or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	0.0%
Values	Daily Returns

AUTONATION  vs.  Apple Inc

AUTONATION

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 fundamental indicators, Apple is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AUTONATION and Apple

The main advantage of trading using opposite AUTONATION and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUTONATION 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 AUTONATION 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.