Correlation Between Apple and LPL Financial
Can any of the company-specific risk be diversified away by investing in both Apple and LPL Financial 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 LPL Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and LPL Financial Holdings, you can compare the effects of market volatilities on Apple and LPL Financial 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 LPL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and LPL Financial.
Diversification Opportunities for Apple and LPL Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Apple and LPL is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and LPL Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPL Financial Holdings 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 LPL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPL Financial Holdings has no effect on the direction of Apple i.e., Apple and LPL Financial go up and down completely randomly.
Pair Corralation between Apple and LPL Financial
Assuming the 90 days trading horizon Apple Inc is expected to under-perform the LPL Financial. In addition to that, Apple is 1.22 times more volatile than LPL Financial Holdings. It trades about -0.06 of its total potential returns per unit of risk. LPL Financial Holdings is currently generating about 0.14 per unit of volatility. If you would invest 10,945 in LPL Financial Holdings on October 11, 2024 and sell it today you would earn a total of 375.00 from holding LPL Financial Holdings or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. LPL Financial Holdings
Performance |
| Timeline |
| Apple Inc |
| LPL Financial Holdings |
Apple and LPL Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and LPL Financial
The main advantage of trading using opposite Apple and LPL Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, LPL Financial 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 LPL Financial will offset losses from the drop in LPL Financial's long position.| Apple vs. Fresenius Medical Care | Apple vs. Telecomunicaes Brasileiras SA | Apple vs. United Natural Foods, | Apple vs. Guidewire Software, |
| LPL Financial vs. STAG Industrial, | LPL Financial vs. Nordon Indstrias Metalrgicas | LPL Financial vs. Datadog, | LPL Financial vs. Broadridge Financial Solutions, |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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