Correlation Between AMERICAN POTASH and Apple
Can any of the company-specific risk be diversified away by investing in both AMERICAN POTASH 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 AMERICAN POTASH and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMERICAN POTASH P and Apple Inc, you can compare the effects of market volatilities on AMERICAN POTASH 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 AMERICAN POTASH with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMERICAN POTASH and Apple.
Diversification Opportunities for AMERICAN POTASH and Apple
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AMERICAN and Apple is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding AMERICAN POTASH P and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and AMERICAN POTASH 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 AMERICAN POTASH P 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 AMERICAN POTASH i.e., AMERICAN POTASH and Apple go up and down completely randomly.
Pair Corralation between AMERICAN POTASH and Apple
Assuming the 90 days horizon AMERICAN POTASH P is expected to generate 8.0 times more return on investment than Apple. However, AMERICAN POTASH is 8.0 times more volatile than Apple Inc. It trades about 0.07 of its potential returns per unit of risk. Apple Inc is currently generating about 0.16 per unit of risk. If you would invest 6.75 in AMERICAN POTASH P on September 27, 2024 and sell it today you would earn a total of 2.30 from holding AMERICAN POTASH P or generate 34.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMERICAN POTASH P vs. Apple Inc
Performance |
| Timeline |
| AMERICAN POTASH P |
| Apple Inc |
AMERICAN POTASH and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMERICAN POTASH and Apple
The main advantage of trading using opposite AMERICAN POTASH and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMERICAN POTASH 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.| AMERICAN POTASH vs. Apple Inc | AMERICAN POTASH vs. Apple Inc | AMERICAN POTASH vs. Apple Inc | AMERICAN POTASH vs. Apple Inc |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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