Correlation Between Apple and Corporate Travel
Can any of the company-specific risk be diversified away by investing in both Apple and Corporate Travel 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 Corporate Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Corporate Travel Management, you can compare the effects of market volatilities on Apple and Corporate Travel 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 Corporate Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Corporate Travel.
Diversification Opportunities for Apple and Corporate Travel
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and Corporate is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Corporate Travel Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Travel Man 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 Corporate Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Travel Man has no effect on the direction of Apple i.e., Apple and Corporate Travel go up and down completely randomly.
Pair Corralation between Apple and Corporate Travel
Assuming the 90 days trading horizon Apple is expected to generate 5.12 times less return on investment than Corporate Travel. But when comparing it to its historical volatility, Apple Inc is 2.32 times less risky than Corporate Travel. It trades about 0.13 of its potential returns per unit of risk. Corporate Travel Management is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 700.00 in Corporate Travel Management on August 29, 2024 and sell it today you would earn a total of 135.00 from holding Corporate Travel Management or generate 19.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Corporate Travel Management
Performance |
| Timeline |
| Apple Inc |
| Corporate Travel Man |
Apple and Corporate Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Corporate Travel
The main advantage of trading using opposite Apple and Corporate Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Corporate Travel 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 Corporate Travel will offset losses from the drop in Corporate Travel's long position.| Apple vs. Elmos Semiconductor SE | Apple vs. JAPAN TOBACCO UNSPADR12 | Apple vs. Samsung Electronics Co | Apple vs. BE Semiconductor Industries |
| Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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