Correlation Between Apple and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Apple and AstraZeneca PLC 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 AstraZeneca PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and AstraZeneca PLC ADR, you can compare the effects of market volatilities on Apple and AstraZeneca PLC 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 AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and AstraZeneca PLC.
Diversification Opportunities for Apple and AstraZeneca PLC
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Apple and AstraZeneca is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and AstraZeneca PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC ADR 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 are associated (or correlated) with AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC ADR has no effect on the direction of Apple i.e., Apple and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Apple and AstraZeneca PLC
Given the investment horizon of 90 days Apple Inc is expected to under-perform the AstraZeneca PLC. In addition to that, Apple is 1.64 times more volatile than AstraZeneca PLC ADR. It trades about -0.39 of its total potential returns per unit of risk. AstraZeneca PLC ADR is currently generating about 0.15 per unit of volatility. If you would invest 6,523 in AstraZeneca PLC ADR on October 23, 2024 and sell it today you would earn a total of 155.00 from holding AstraZeneca PLC ADR or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. AstraZeneca PLC ADR
Performance |
| Timeline |
| Apple Inc |
| AstraZeneca PLC ADR |
Apple and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and AstraZeneca PLC
The main advantage of trading using opposite Apple and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.The idea behind Apple Inc and AstraZeneca PLC ADR 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.| AstraZeneca PLC vs. Qurate Retail Series | AstraZeneca PLC vs. Evolution Gaming Group | AstraZeneca PLC vs. Ross Stores | AstraZeneca PLC vs. Wizz Air Holdings |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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