Correlation Between Apple and ON Semiconductor
Can any of the company-specific risk be diversified away by investing in both Apple and ON Semiconductor 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 ON Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and ON Semiconductor, you can compare the effects of market volatilities on Apple and ON Semiconductor 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 ON Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and ON Semiconductor.
Diversification Opportunities for Apple and ON Semiconductor
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Apple and O2NS34 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ON Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON Semiconductor 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 ON Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON Semiconductor has no effect on the direction of Apple i.e., Apple and ON Semiconductor go up and down completely randomly.
Pair Corralation between Apple and ON Semiconductor
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.51 times more return on investment than ON Semiconductor. However, Apple Inc is 1.96 times less risky than ON Semiconductor. It trades about 0.08 of its potential returns per unit of risk. ON Semiconductor is currently generating about 0.0 per unit of risk. If you would invest 3,880 in Apple Inc on October 28, 2024 and sell it today you would earn a total of 2,680 from holding Apple Inc or generate 69.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.99% |
| Values | Daily Returns |
Apple Inc vs. ON Semiconductor
Performance |
| Timeline |
| Apple Inc |
| ON Semiconductor |
Apple and ON Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and ON Semiconductor
The main advantage of trading using opposite Apple and ON Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, ON Semiconductor 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 ON Semiconductor will offset losses from the drop in ON Semiconductor's long position.| Apple vs. G2D Investments | Apple vs. Extra Space Storage | Apple vs. Electronic Arts | Apple vs. Molson Coors Beverage |
| ON Semiconductor vs. Zoom Video Communications | ON Semiconductor vs. United States Steel | ON Semiconductor vs. Capital One Financial | ON Semiconductor vs. Alaska Air Group, |
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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