Correlation Between AIR PRODCHEMICALS and Apple
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS 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 AIR PRODCHEMICALS and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and Apple Inc, you can compare the effects of market volatilities on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Apple.
Diversification Opportunities for AIR PRODCHEMICALS and Apple
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AIR and Apple is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and Apple go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Apple
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 1.11 times less return on investment than Apple. But when comparing it to its historical volatility, AIR PRODCHEMICALS is 1.08 times less risky than Apple. It trades about 0.12 of its potential returns per unit of risk. Apple Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 21,269 in Apple Inc on August 25, 2024 and sell it today you would earn a total of 776.00 from holding Apple Inc or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. Apple Inc
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Apple Inc |
AIR PRODCHEMICALS and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Apple
The main advantage of trading using opposite AIR PRODCHEMICALS and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS 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.| AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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