Correlation Between KAUFMAN ET and Apple
Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET 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 KAUFMAN ET and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAUFMAN ET BROAD and Apple Inc, you can compare the effects of market volatilities on KAUFMAN ET 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 KAUFMAN ET with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and Apple.
Diversification Opportunities for KAUFMAN ET and Apple
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KAUFMAN and Apple is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and KAUFMAN ET 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 KAUFMAN ET BROAD 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 KAUFMAN ET i.e., KAUFMAN ET and Apple go up and down completely randomly.
Pair Corralation between KAUFMAN ET and Apple
Assuming the 90 days trading horizon KAUFMAN ET is expected to generate 1.19 times less return on investment than Apple. In addition to that, KAUFMAN ET is 1.4 times more volatile than Apple Inc. It trades about 0.04 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.07 per unit of volatility. If you would invest 15,586 in Apple Inc on August 29, 2024 and sell it today you would earn a total of 6,824 from holding Apple Inc or generate 43.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAUFMAN ET BROAD vs. Apple Inc
Performance |
| Timeline |
| KAUFMAN ET BROAD |
| Apple Inc |
KAUFMAN ET and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAUFMAN ET and Apple
The main advantage of trading using opposite KAUFMAN ET and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET 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 KAUFMAN ET BROAD 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.| Apple vs. Treasury Wine Estates | Apple vs. Daito Trust Construction | Apple vs. Granite Construction | Apple vs. TITAN MACHINERY |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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