Correlation Between Apple and Keysight Technologies
Can any of the company-specific risk be diversified away by investing in both Apple and Keysight Technologies 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 Keysight Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Keysight Technologies, you can compare the effects of market volatilities on Apple and Keysight Technologies 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 Keysight Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Keysight Technologies.
Diversification Opportunities for Apple and Keysight Technologies
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Apple and Keysight is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies 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 Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of Apple i.e., Apple and Keysight Technologies go up and down completely randomly.
Pair Corralation between Apple and Keysight Technologies
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Keysight Technologies. In addition to that, Apple is 1.15 times more volatile than Keysight Technologies. It trades about -0.08 of its total potential returns per unit of risk. Keysight Technologies is currently generating about 0.32 per unit of volatility. If you would invest 16,084 in Keysight Technologies on November 3, 2024 and sell it today you would earn a total of 1,751 from holding Keysight Technologies or generate 10.89% 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 vs. Keysight Technologies
Performance |
| Timeline |
| Apple Inc |
| Keysight Technologies |
Apple and Keysight Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Keysight Technologies
The main advantage of trading using opposite Apple and Keysight Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Keysight Technologies 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 Keysight Technologies will offset losses from the drop in Keysight Technologies' long position.The idea behind Apple Inc and Keysight Technologies 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.| Keysight Technologies vs. Vontier Corp | Keysight Technologies vs. Teledyne Technologies Incorporated | Keysight Technologies vs. ESCO Technologies | Keysight Technologies vs. MKS Instruments |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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