Correlation Between TT Electronics and Apple
Can any of the company-specific risk be diversified away by investing in both TT Electronics 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 TT Electronics and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TT Electronics PLC and Apple Inc, you can compare the effects of market volatilities on TT Electronics 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 TT Electronics with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and Apple.
Diversification Opportunities for TT Electronics and Apple
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 7TT and Apple is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and TT Electronics 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 TT Electronics PLC 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 TT Electronics i.e., TT Electronics and Apple go up and down completely randomly.
Pair Corralation between TT Electronics and Apple
Assuming the 90 days trading horizon TT Electronics PLC is expected to generate 6.93 times more return on investment than Apple. However, TT Electronics is 6.93 times more volatile than Apple Inc. It trades about 0.29 of its potential returns per unit of risk. Apple Inc is currently generating about 0.41 per unit of risk. If you would invest 88.00 in TT Electronics PLC on September 15, 2024 and sell it today you would earn a total of 41.00 from holding TT Electronics PLC or generate 46.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TT Electronics PLC vs. Apple Inc
Performance |
| Timeline |
| TT Electronics PLC |
| Apple Inc |
TT Electronics and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TT Electronics and Apple
The main advantage of trading using opposite TT Electronics and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TT Electronics 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.| TT Electronics vs. Apple Inc | TT Electronics vs. Apple Inc | TT Electronics vs. Apple Inc | TT Electronics 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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