Correlation Between Apple and Pettenati
Can any of the company-specific risk be diversified away by investing in both Apple and Pettenati 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 Pettenati into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Pettenati SA Industria, you can compare the effects of market volatilities on Apple and Pettenati 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 Pettenati. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Pettenati.
Diversification Opportunities for Apple and Pettenati
Very good diversification
The 3 months correlation between Apple and Pettenati is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Pettenati SA Industria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pettenati SA Industria 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 Pettenati. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pettenati SA Industria has no effect on the direction of Apple i.e., Apple and Pettenati go up and down completely randomly.
Pair Corralation between Apple and Pettenati
Assuming the 90 days trading horizon Apple is expected to generate 8.63 times less return on investment than Pettenati. But when comparing it to its historical volatility, Apple Inc is 2.83 times less risky than Pettenati. It trades about 0.04 of its potential returns per unit of risk. Pettenati SA Industria is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 608.00 in Pettenati SA Industria on August 26, 2024 and sell it today you would earn a total of 41.00 from holding Pettenati SA Industria or generate 6.74% 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. Pettenati SA Industria
Performance |
| Timeline |
| Apple Inc |
| Pettenati SA Industria |
Apple and Pettenati Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Pettenati
The main advantage of trading using opposite Apple and Pettenati positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Pettenati 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 Pettenati will offset losses from the drop in Pettenati's long position.| Apple vs. Tyson Foods | Apple vs. Take Two Interactive Software | Apple vs. Charter Communications | Apple vs. METISA Metalrgica Timboense |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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