Correlation Between Apple and Northern Graphite
Can any of the company-specific risk be diversified away by investing in both Apple and Northern Graphite 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 Northern Graphite 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 Northern Graphite, you can compare the effects of market volatilities on Apple and Northern Graphite 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 Northern Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Northern Graphite.
Diversification Opportunities for Apple and Northern Graphite
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and Northern is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Northern Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Graphite 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 Northern Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Graphite has no effect on the direction of Apple i.e., Apple and Northern Graphite go up and down completely randomly.
Pair Corralation between Apple and Northern Graphite
Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.22 times more return on investment than Northern Graphite. However, Apple Inc CDR is 4.62 times less risky than Northern Graphite. It trades about 0.07 of its potential returns per unit of risk. Northern Graphite is currently generating about -0.02 per unit of risk. If you would invest 2,172 in Apple Inc CDR on September 3, 2024 and sell it today you would earn a total of 1,303 from holding Apple Inc CDR or generate 59.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc CDR vs. Northern Graphite
Performance |
| Timeline |
| Apple Inc CDR |
| Northern Graphite |
Apple and Northern Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Northern Graphite
The main advantage of trading using opposite Apple and Northern Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Northern Graphite 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 Northern Graphite will offset losses from the drop in Northern Graphite's long position.| Apple vs. Canaf Investments | Apple vs. Brookfield Office Properties | Apple vs. Eddy Smart Home | Apple vs. Canso Select Opportunities |
| Northern Graphite vs. Focus Graphite | Northern Graphite vs. Mason Graphite | Northern Graphite vs. Lomiko Metals | Northern Graphite vs. Graphite One |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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