Correlation Between Apple and International Tower
Can any of the company-specific risk be diversified away by investing in both Apple and International Tower 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 International Tower 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 International Tower Hill, you can compare the effects of market volatilities on Apple and International Tower 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 International Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and International Tower.
Diversification Opportunities for Apple and International Tower
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Apple and International is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and International Tower Hill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Tower Hill 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 International Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Tower Hill has no effect on the direction of Apple i.e., Apple and International Tower go up and down completely randomly.
Pair Corralation between Apple and International Tower
Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.18 times more return on investment than International Tower. However, Apple Inc CDR is 5.68 times less risky than International Tower. It trades about 0.25 of its potential returns per unit of risk. International Tower Hill is currently generating about -0.24 per unit of risk. If you would invest 3,311 in Apple Inc CDR on September 1, 2024 and sell it today you would earn a total of 164.00 from holding Apple Inc CDR or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc CDR vs. International Tower Hill
Performance |
| Timeline |
| Apple Inc CDR |
| International Tower Hill |
Apple and International Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and International Tower
The main advantage of trading using opposite Apple and International Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, International Tower 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 International Tower will offset losses from the drop in International Tower's long position.The idea behind Apple Inc CDR and International Tower Hill 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.| International Tower vs. Xtra Gold Resources Corp | International Tower vs. Loncor Resources | International Tower vs. TRX Gold Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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