Correlation Between Apple and Online Brands
Can any of the company-specific risk be diversified away by investing in both Apple and Online Brands 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 Online Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Online Brands Nordic, you can compare the effects of market volatilities on Apple and Online Brands 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 Online Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Online Brands.
Diversification Opportunities for Apple and Online Brands
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and Online is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Online Brands Nordic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Online Brands Nordic 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 Online Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Online Brands Nordic has no effect on the direction of Apple i.e., Apple and Online Brands go up and down completely randomly.
Pair Corralation between Apple and Online Brands
Given the investment horizon of 90 days Apple Inc is expected to generate 0.38 times more return on investment than Online Brands. However, Apple Inc is 2.63 times less risky than Online Brands. It trades about -0.39 of its potential returns per unit of risk. Online Brands Nordic is currently generating about -0.31 per unit of risk. If you would invest 25,527 in Apple Inc on October 23, 2024 and sell it today you would lose (2,529) from holding Apple Inc or give up 9.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 83.33% |
| Values | Daily Returns |
Apple Inc vs. Online Brands Nordic
Performance |
| Timeline |
| Apple Inc |
| Online Brands Nordic |
Apple and Online Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Online Brands
The main advantage of trading using opposite Apple and Online Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Online Brands 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 Online Brands will offset losses from the drop in Online Brands' long position.The idea behind Apple Inc and Online Brands Nordic 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.| Online Brands vs. NetJobs Group AB | Online Brands vs. Mantex AB | Online Brands vs. Doxa AB | Online Brands vs. Clean Motion AB |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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