Correlation Between VersaBank and Apple

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

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

Diversification Opportunities for VersaBank and Apple

-0.11

Correlation Coefficient

VersaBank  Apple

Good diversification

The 3 months correlation between VersaBank and Apple is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank 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 VersaBank 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 VersaBank 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 VersaBank i.e., VersaBank and Apple go up and down completely randomly.

Pair Corralation between VersaBank and Apple

Assuming the 90 days trading horizon VersaBank is expected to under-perform the Apple. In addition to that, VersaBank is 2.48 times more volatile than Apple Inc CDR. It trades about -0.21 of its total potential returns per unit of risk. Apple Inc CDR is currently generating about -0.09 per unit of volatility. If you would invest  3,630  in Apple Inc CDR on October 11, 2024 and sell it today you would lose (80.00) from holding Apple Inc CDR or give up 2.2% of portfolio value over 90 days.

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

VersaBank  vs.  Apple Inc CDR

VersaBank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VersaBank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, VersaBank 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

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 7 (%) 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 February 2025.

Pair Trading with VersaBank and Apple

The main advantage of trading using opposite VersaBank and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank 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 VersaBank 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.