Correlation Between Aristocrat Leisure and Apple
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Apple 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 Aristocrat Leisure and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure Limited and Apple Inc, you can compare the effects of market volatilities on Aristocrat Leisure and Apple 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 Aristocrat Leisure with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Apple.
Diversification Opportunities for Aristocrat Leisure and Apple
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aristocrat and Apple is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Aristocrat Leisure 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 Aristocrat Leisure Limited are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Apple go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Apple
Assuming the 90 days horizon Aristocrat Leisure is expected to generate 1.37 times less return on investment than Apple. In addition to that, Aristocrat Leisure is 1.23 times more volatile than Apple Inc. It trades about 0.1 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.17 per unit of volatility. If you would invest 21,370 in Apple Inc on October 17, 2024 and sell it today you would earn a total of 1,510 from holding Apple Inc or generate 7.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure Limited vs. Apple Inc
Performance |
| Timeline |
| Aristocrat Leisure |
| Apple Inc |
Aristocrat Leisure and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Apple
The main advantage of trading using opposite Aristocrat Leisure and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Aristocrat Leisure vs. WIZZ AIR HLDGUNSPADR4 | Aristocrat Leisure vs. JAPAN TOBACCO UNSPADR12 | Aristocrat Leisure vs. Pentair plc | Aristocrat Leisure vs. Alaska Air Group |
| Apple vs. USWE SPORTS AB | Apple vs. ePlay Digital | Apple vs. Aristocrat Leisure Limited | Apple vs. SUN LIFE FINANCIAL |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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