Correlation Between Apple and Investar Holding
Can any of the company-specific risk be diversified away by investing in both Apple and Investar Holding 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 Investar Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Investar Holding Corp, you can compare the effects of market volatilities on Apple and Investar Holding 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 Investar Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Investar Holding.
Diversification Opportunities for Apple and Investar Holding
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Apple and Investar is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Investar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investar Holding Corp 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 Investar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investar Holding Corp has no effect on the direction of Apple i.e., Apple and Investar Holding go up and down completely randomly.
Pair Corralation between Apple and Investar Holding
Given the investment horizon of 90 days Apple Inc is expected to generate 0.94 times more return on investment than Investar Holding. However, Apple Inc is 1.06 times less risky than Investar Holding. It trades about -0.08 of its potential returns per unit of risk. Investar Holding Corp is currently generating about -0.25 per unit of risk. If you would invest 24,385 in Apple Inc on November 3, 2024 and sell it today you would lose (785.00) from holding Apple Inc or give up 3.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Apple Inc vs. Investar Holding Corp
Performance |
| Timeline |
| Apple Inc |
| Investar Holding Corp |
Apple and Investar Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Investar Holding
The main advantage of trading using opposite Apple and Investar Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Investar Holding 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 Investar Holding will offset losses from the drop in Investar Holding's long position.The idea behind Apple Inc and Investar Holding Corp 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.| Investar Holding vs. Magyar Bancorp | Investar Holding vs. Home Federal Bancorp | Investar Holding vs. Community West Bancshares | Investar Holding vs. First Northwest Bancorp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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