Correlation Between Apple and Fannie Mae
Can any of the company-specific risk be diversified away by investing in both Apple and Fannie Mae 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 Apple and Fannie Mae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Fannie Mae, you can compare the effects of market volatilities on Apple and Fannie Mae 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 Apple with a short position of Fannie Mae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Fannie Mae.
Diversification Opportunities for Apple and Fannie Mae
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Apple and Fannie is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Fannie Mae in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fannie Mae and Apple 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 Apple Inc are associated (or correlated) with Fannie Mae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fannie Mae has no effect on the direction of Apple i.e., Apple and Fannie Mae go up and down completely randomly.
Pair Corralation between Apple and Fannie Mae
Assuming the 90 days trading horizon Apple is expected to generate 19.79 times less return on investment than Fannie Mae. But when comparing it to its historical volatility, Apple Inc is 2.22 times less risky than Fannie Mae. It trades about 0.04 of its potential returns per unit of risk. Fannie Mae is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 138.00 in Fannie Mae on August 31, 2024 and sell it today you would earn a total of 176.00 from holding Fannie Mae or generate 127.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Apple Inc vs. Fannie Mae
Performance |
| Timeline |
| Apple Inc |
| Fannie Mae |
Apple and Fannie Mae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Fannie Mae
The main advantage of trading using opposite Apple and Fannie Mae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Fannie Mae 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 Fannie Mae will offset losses from the drop in Fannie Mae's long position.| Apple vs. L3Harris Technologies | Apple vs. Cairn Homes PLC | Apple vs. Celebrus Technologies plc | Apple vs. Concurrent Technologies Plc |
| Fannie Mae vs. United Internet AG | Fannie Mae vs. Live Nation Entertainment | Fannie Mae vs. Gamma Communications PLC | Fannie Mae vs. Prosiebensat 1 Media |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |