Correlation Between Apple and State Bank
Can any of the company-specific risk be diversified away by investing in both Apple and State Bank 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 State Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and State Bank of, you can compare the effects of market volatilities on Apple and State Bank 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 State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and State Bank.
Diversification Opportunities for Apple and State Bank
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and State is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank 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 State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of Apple i.e., Apple and State Bank go up and down completely randomly.
Pair Corralation between Apple and State Bank
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.87 times more return on investment than State Bank. However, Apple Inc is 1.15 times less risky than State Bank. It trades about 0.1 of its potential returns per unit of risk. State Bank of is currently generating about 0.01 per unit of risk. If you would invest 20,355 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 1,985 from holding Apple Inc or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Apple Inc vs. State Bank of
Performance |
| Timeline |
| Apple Inc |
| State Bank |
Apple and State Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and State Bank
The main advantage of trading using opposite Apple and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, State Bank 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 State Bank will offset losses from the drop in State Bank's long position.| Apple vs. Elmos Semiconductor SE | Apple vs. JAPAN TOBACCO UNSPADR12 | Apple vs. Samsung Electronics Co | Apple vs. BE Semiconductor Industries |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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