Correlation Between Williams Sonoma and Apple

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

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

Diversification Opportunities for Williams Sonoma and Apple

0.85

Correlation Coefficient

Williams Sonoma  Apple

Very poor diversification

The 3 months correlation between Williams and Apple is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Williams Sonoma and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Williams Sonoma 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 Williams Sonoma 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 Williams Sonoma i.e., Williams Sonoma and Apple go up and down completely randomly.

Pair Corralation between Williams Sonoma and Apple

Considering the 90-day investment horizon Williams Sonoma is expected to generate 3.82 times more return on investment than Apple. However, Williams Sonoma is 3.82 times more volatile than Apple Inc. It trades about 0.14 of its potential returns per unit of risk. Apple Inc is currently generating about 0.04 per unit of risk. If you would invest  14,554  in Williams Sonoma on October 12, 2024 and sell it today you would earn a total of  5,143  from holding Williams Sonoma or generate 35.34% return on investment over 90 days.

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

Williams Sonoma  vs.  Apple Inc

Williams Sonoma

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Williams Sonoma are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Williams Sonoma displayed solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Apple is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Williams Sonoma and Apple

The main advantage of trading using opposite Williams Sonoma and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Williams Sonoma 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 Williams Sonoma 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.