Correlation Between Apple and Maverick Energy
Can any of the company-specific risk be diversified away by investing in both Apple and Maverick Energy 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 Maverick Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Maverick Energy Group, you can compare the effects of market volatilities on Apple and Maverick Energy 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 Maverick Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Maverick Energy.
Diversification Opportunities for Apple and Maverick Energy
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Apple and Maverick is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Maverick Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maverick Energy Group 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 Maverick Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maverick Energy Group has no effect on the direction of Apple i.e., Apple and Maverick Energy go up and down completely randomly.
Pair Corralation between Apple and Maverick Energy
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Maverick Energy. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 4.15 times less risky than Maverick Energy. The stock trades about -0.08 of its potential returns per unit of risk. The Maverick Energy Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.67 in Maverick Energy Group on November 3, 2024 and sell it today you would earn a total of 0.01 from holding Maverick Energy Group or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Apple Inc vs. Maverick Energy Group
Performance |
| Timeline |
| Apple Inc |
| Maverick Energy Group |
Apple and Maverick Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Maverick Energy
The main advantage of trading using opposite Apple and Maverick Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Maverick Energy 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 Maverick Energy will offset losses from the drop in Maverick Energy's long position.The idea behind Apple Inc and Maverick Energy Group 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.| Maverick Energy vs. Gulf Keystone Petroleum | Maverick Energy vs. Falcon Oil Gas | Maverick Energy vs. North European Oil | Maverick Energy vs. SandRidge Energy |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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