Correlation Between Apple and Commencement Bancorp
Can any of the company-specific risk be diversified away by investing in both Apple and Commencement Bancorp 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 Commencement Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Commencement Bancorp, you can compare the effects of market volatilities on Apple and Commencement Bancorp 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 Commencement Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Commencement Bancorp.
Diversification Opportunities for Apple and Commencement Bancorp
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and Commencement is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Commencement Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commencement Bancorp 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 Commencement Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commencement Bancorp has no effect on the direction of Apple i.e., Apple and Commencement Bancorp go up and down completely randomly.
Pair Corralation between Apple and Commencement Bancorp
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Commencement Bancorp. In addition to that, Apple is 3.02 times more volatile than Commencement Bancorp. It trades about -0.08 of its total potential returns per unit of risk. Commencement Bancorp is currently generating about 0.1 per unit of volatility. If you would invest 1,255 in Commencement Bancorp on October 11, 2024 and sell it today you would earn a total of 10.00 from holding Commencement Bancorp or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Commencement Bancorp
Performance |
| Timeline |
| Apple Inc |
| Commencement Bancorp |
Apple and Commencement Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Commencement Bancorp
The main advantage of trading using opposite Apple and Commencement Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Commencement Bancorp 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 Commencement Bancorp will offset losses from the drop in Commencement Bancorp's long position.The idea behind Apple Inc and Commencement Bancorp 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.| Commencement Bancorp vs. Summit Bank Group | Commencement Bancorp vs. Pacific West Bancorp | Commencement Bancorp vs. Savi Financial | Commencement Bancorp vs. MNB Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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