Correlation Between SOLENO THERAPEUT and Apple
Can any of the company-specific risk be diversified away by investing in both SOLENO THERAPEUT 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 SOLENO THERAPEUT and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOLENO THERAPEUT DL 001 and Apple Inc, you can compare the effects of market volatilities on SOLENO THERAPEUT 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 SOLENO THERAPEUT with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOLENO THERAPEUT and Apple.
Diversification Opportunities for SOLENO THERAPEUT and Apple
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SOLENO and Apple is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SOLENO THERAPEUT DL 001 and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and SOLENO THERAPEUT 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 SOLENO THERAPEUT DL 001 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 SOLENO THERAPEUT i.e., SOLENO THERAPEUT and Apple go up and down completely randomly.
Pair Corralation between SOLENO THERAPEUT and Apple
Assuming the 90 days horizon SOLENO THERAPEUT DL 001 is expected to generate 3.24 times more return on investment than Apple. However, SOLENO THERAPEUT is 3.24 times more volatile than Apple Inc. It trades about 0.1 of its potential returns per unit of risk. Apple Inc is currently generating about 0.14 per unit of risk. If you would invest 4,324 in SOLENO THERAPEUT DL 001 on August 31, 2024 and sell it today you would earn a total of 644.00 from holding SOLENO THERAPEUT DL 001 or generate 14.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.78% |
| Values | Daily Returns |
SOLENO THERAPEUT DL 001 vs. Apple Inc
Performance |
| Timeline |
| SOLENO THERAPEUT |
| Apple Inc |
SOLENO THERAPEUT and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOLENO THERAPEUT and Apple
The main advantage of trading using opposite SOLENO THERAPEUT and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOLENO THERAPEUT 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.| SOLENO THERAPEUT vs. Apple Inc | SOLENO THERAPEUT vs. Apple Inc | SOLENO THERAPEUT vs. Apple Inc | SOLENO THERAPEUT 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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