Correlation Between Apple and Pollard Banknote
Can any of the company-specific risk be diversified away by investing in both Apple and Pollard Banknote 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 Pollard Banknote 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 Pollard Banknote Limited, you can compare the effects of market volatilities on Apple and Pollard Banknote 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 Pollard Banknote. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Pollard Banknote.
Diversification Opportunities for Apple and Pollard Banknote
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Apple and Pollard is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Pollard Banknote Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pollard Banknote 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 Pollard Banknote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pollard Banknote has no effect on the direction of Apple i.e., Apple and Pollard Banknote go up and down completely randomly.
Pair Corralation between Apple and Pollard Banknote
Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.35 times more return on investment than Pollard Banknote. However, Apple Inc CDR is 2.83 times less risky than Pollard Banknote. It trades about 0.11 of its potential returns per unit of risk. Pollard Banknote Limited is currently generating about -0.02 per unit of risk. If you would invest 2,860 in Apple Inc CDR on September 1, 2024 and sell it today you would earn a total of 615.00 from holding Apple Inc CDR or generate 21.5% 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. Pollard Banknote Limited
Performance |
| Timeline |
| Apple Inc CDR |
| Pollard Banknote |
Apple and Pollard Banknote Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Pollard Banknote
The main advantage of trading using opposite Apple and Pollard Banknote positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Pollard Banknote 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 Pollard Banknote will offset losses from the drop in Pollard Banknote's long position.The idea behind Apple Inc CDR and Pollard Banknote Limited 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.| Pollard Banknote vs. TFI International | Pollard Banknote vs. Baylin Technologies | Pollard Banknote vs. Information Services |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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