Correlation Between Apple and FP Newspapers
Can any of the company-specific risk be diversified away by investing in both Apple and FP Newspapers 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 Apple and FP Newspapers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc CDR and FP Newspapers, you can compare the effects of market volatilities on Apple and FP Newspapers 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 Apple with a short position of FP Newspapers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and FP Newspapers.
Diversification Opportunities for Apple and FP Newspapers
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Apple and FP Newspapers is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and FP Newspapers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FP Newspapers and Apple 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 Apple Inc CDR are associated (or correlated) with FP Newspapers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FP Newspapers has no effect on the direction of Apple i.e., Apple and FP Newspapers go up and down completely randomly.
Pair Corralation between Apple and FP Newspapers
Assuming the 90 days trading horizon Apple Inc CDR is expected to under-perform the FP Newspapers. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc CDR is 1.96 times less risky than FP Newspapers. The stock trades about -0.37 of its potential returns per unit of risk. The FP Newspapers is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 48.00 in FP Newspapers on October 21, 2024 and sell it today you would earn a total of 6.00 from holding FP Newspapers or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Apple Inc CDR vs. FP Newspapers
Performance |
| Timeline |
| Apple Inc CDR |
| FP Newspapers |
Apple and FP Newspapers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and FP Newspapers
The main advantage of trading using opposite Apple and FP Newspapers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, FP Newspapers 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 FP Newspapers will offset losses from the drop in FP Newspapers' long position.| Apple vs. Costco Wholesale Corp | Apple vs. Champion Gaming Group | Apple vs. Millennium Silver Corp | Apple vs. Gatos Silver |
| FP Newspapers vs. Alphabet Inc CDR | FP Newspapers vs. Microsoft Corp CDR | FP Newspapers vs. NVIDIA CDR | FP Newspapers vs. Tesla Inc CDR |
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 Stocks Directory module to find actively traded stocks across global markets.
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