Correlation Between Apple and TEAM Plc
Can any of the company-specific risk be diversified away by investing in both Apple and TEAM Plc 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 TEAM Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and TEAM plc, you can compare the effects of market volatilities on Apple and TEAM Plc 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 TEAM Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and TEAM Plc.
Diversification Opportunities for Apple and TEAM Plc
Excellent diversification
The 3 months correlation between Apple and TEAM is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and TEAM plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TEAM plc 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 TEAM Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TEAM plc has no effect on the direction of Apple i.e., Apple and TEAM Plc go up and down completely randomly.
Pair Corralation between Apple and TEAM Plc
Given the investment horizon of 90 days Apple Inc is expected to under-perform the TEAM Plc. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 2.45 times less risky than TEAM Plc. The stock trades about -0.39 of its potential returns per unit of risk. The TEAM plc is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,000.00 in TEAM plc on October 23, 2024 and sell it today you would earn a total of 170.00 from holding TEAM plc or generate 17.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. TEAM plc
Performance |
| Timeline |
| Apple Inc |
| TEAM plc |
Apple and TEAM Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and TEAM Plc
The main advantage of trading using opposite Apple and TEAM Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, TEAM Plc 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 TEAM Plc will offset losses from the drop in TEAM Plc's long position.The idea behind Apple Inc and TEAM plc 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.| TEAM Plc vs. Odfjell Drilling | TEAM Plc vs. Orient Telecoms | TEAM Plc vs. Impax Asset Management | TEAM Plc vs. Telecom Italia SpA |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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