Correlation Between Apple and National Retail
Can any of the company-specific risk be diversified away by investing in both Apple and National Retail 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 National Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and National Retail Properties, you can compare the effects of market volatilities on Apple and National Retail 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 National Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and National Retail.
Diversification Opportunities for Apple and National Retail
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and National is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop 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 National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of Apple i.e., Apple and National Retail go up and down completely randomly.
Pair Corralation between Apple and National Retail
Assuming the 90 days trading horizon Apple Inc is expected to under-perform the National Retail. In addition to that, Apple is 1.09 times more volatile than National Retail Properties. It trades about -0.44 of its total potential returns per unit of risk. National Retail Properties is currently generating about -0.05 per unit of volatility. If you would invest 3,891 in National Retail Properties on October 23, 2024 and sell it today you would lose (41.00) from holding National Retail Properties or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. National Retail Properties
Performance |
| Timeline |
| Apple Inc |
| National Retail Prop |
Apple and National Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and National Retail
The main advantage of trading using opposite Apple and National Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, National Retail 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 National Retail will offset losses from the drop in National Retail's long position.| Apple vs. AECOM TECHNOLOGY | Apple vs. DICKS Sporting Goods | Apple vs. Madison Square Garden | Apple vs. COLUMBIA SPORTSWEAR |
| National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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