Correlation Between JPM INDIAN and Apple
Can any of the company-specific risk be diversified away by investing in both JPM INDIAN 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 JPM INDIAN and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPM INDIAN INVT and Apple Inc, you can compare the effects of market volatilities on JPM INDIAN 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 JPM INDIAN with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM INDIAN and Apple.
Diversification Opportunities for JPM INDIAN and Apple
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JPM and Apple is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding JPM INDIAN INVT and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and JPM INDIAN 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 JPM INDIAN INVT 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 JPM INDIAN i.e., JPM INDIAN and Apple go up and down completely randomly.
Pair Corralation between JPM INDIAN and Apple
Assuming the 90 days horizon JPM INDIAN is expected to generate 1.63 times less return on investment than Apple. But when comparing it to its historical volatility, JPM INDIAN INVT is 1.2 times less risky than Apple. It trades about 0.06 of its potential returns per unit of risk. Apple Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 13,303 in Apple Inc on August 29, 2024 and sell it today you would earn a total of 9,102 from holding Apple Inc or generate 68.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.64% |
| Values | Daily Returns |
JPM INDIAN INVT vs. Apple Inc
Performance |
| Timeline |
| JPM INDIAN INVT |
| Apple Inc |
JPM INDIAN and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPM INDIAN and Apple
The main advantage of trading using opposite JPM INDIAN and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPM INDIAN 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 JPM INDIAN INVT 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.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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