Correlation Between Apple and Grupo Aval
Can any of the company-specific risk be diversified away by investing in both Apple and Grupo Aval 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 Grupo Aval into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Grupo Aval Acciones, you can compare the effects of market volatilities on Apple and Grupo Aval 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 Grupo Aval. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Grupo Aval.
Diversification Opportunities for Apple and Grupo Aval
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and Grupo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Grupo Aval Acciones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aval Acciones 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 Grupo Aval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aval Acciones has no effect on the direction of Apple i.e., Apple and Grupo Aval go up and down completely randomly.
Pair Corralation between Apple and Grupo Aval
Assuming the 90 days trading horizon Apple Inc is expected to generate 1.05 times more return on investment than Grupo Aval. However, Apple is 1.05 times more volatile than Grupo Aval Acciones. It trades about 0.11 of its potential returns per unit of risk. Grupo Aval Acciones is currently generating about -0.04 per unit of risk. If you would invest 17,665 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 4,275 from holding Apple Inc or generate 24.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Grupo Aval Acciones
Performance |
| Timeline |
| Apple Inc |
| Grupo Aval Acciones |
Apple and Grupo Aval Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Grupo Aval
The main advantage of trading using opposite Apple and Grupo Aval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Grupo Aval 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 Grupo Aval will offset losses from the drop in Grupo Aval's long position.The idea behind Apple Inc and Grupo Aval Acciones pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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