Correlation Between Apple and Greencoat
Can any of the company-specific risk be diversified away by investing in both Apple and Greencoat 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 Greencoat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Greencoat UK Wind, you can compare the effects of market volatilities on Apple and Greencoat 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 Greencoat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Greencoat.
Diversification Opportunities for Apple and Greencoat
Very good diversification
The 3 months correlation between Apple and Greencoat is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Greencoat UK Wind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greencoat UK Wind 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 Greencoat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greencoat UK Wind has no effect on the direction of Apple i.e., Apple and Greencoat go up and down completely randomly.
Pair Corralation between Apple and Greencoat
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.52 times more return on investment than Greencoat. However, Apple Inc is 1.91 times less risky than Greencoat. It trades about 0.08 of its potential returns per unit of risk. Greencoat UK Wind is currently generating about 0.01 per unit of risk. If you would invest 13,249 in Apple Inc on September 1, 2024 and sell it today you would earn a total of 9,201 from holding Apple Inc or generate 69.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Apple Inc vs. Greencoat UK Wind
Performance |
| Timeline |
| Apple Inc |
| Greencoat UK Wind |
Apple and Greencoat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Greencoat
The main advantage of trading using opposite Apple and Greencoat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Greencoat 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 Greencoat will offset losses from the drop in Greencoat's long position.| Apple vs. Sumitomo Rubber Industries | Apple vs. Rayonier Advanced Materials | Apple vs. EAGLE MATERIALS | Apple vs. NEWELL RUBBERMAID |
| Greencoat vs. DeVry Education Group | Greencoat vs. Cogent Communications Holdings | Greencoat vs. Entravision Communications | Greencoat vs. Consolidated Communications Holdings |
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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