Correlation Between Apple and Marcopolo
Can any of the company-specific risk be diversified away by investing in both Apple and Marcopolo 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 Marcopolo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Marcopolo SA, you can compare the effects of market volatilities on Apple and Marcopolo 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 Marcopolo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Marcopolo.
Diversification Opportunities for Apple and Marcopolo
Poor diversification
The 3 months correlation between Apple and Marcopolo is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Marcopolo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcopolo SA 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 Marcopolo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcopolo SA has no effect on the direction of Apple i.e., Apple and Marcopolo go up and down completely randomly.
Pair Corralation between Apple and Marcopolo
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.64 times more return on investment than Marcopolo. However, Apple Inc is 1.57 times less risky than Marcopolo. It trades about 0.15 of its potential returns per unit of risk. Marcopolo SA is currently generating about 0.08 per unit of risk. If you would invest 4,461 in Apple Inc on August 27, 2024 and sell it today you would earn a total of 2,220 from holding Apple Inc or generate 49.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Apple Inc vs. Marcopolo SA
Performance |
| Timeline |
| Apple Inc |
| Marcopolo SA |
Apple and Marcopolo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Marcopolo
The main advantage of trading using opposite Apple and Marcopolo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Marcopolo 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 Marcopolo will offset losses from the drop in Marcopolo's long position.| Apple vs. Tyson Foods | Apple vs. Take Two Interactive Software | Apple vs. Charter Communications | Apple vs. METISA Metalrgica Timboense |
| Marcopolo vs. Randon SA Implementos | Marcopolo vs. Metalurgica Gerdau SA | Marcopolo vs. CCR SA | Marcopolo vs. Iochpe Maxion SA |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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