Correlation Between Apple and LIFE +
Can any of the company-specific risk be diversified away by investing in both Apple and LIFE + 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 LIFE + into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and LIFE BANC SPLIT, you can compare the effects of market volatilities on Apple and LIFE + 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 LIFE +. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and LIFE +.
Diversification Opportunities for Apple and LIFE +
Poor diversification
The 3 months correlation between Apple and LIFE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and LIFE BANC SPLIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFE BANC SPLIT 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 LIFE +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFE BANC SPLIT has no effect on the direction of Apple i.e., Apple and LIFE + go up and down completely randomly.
Pair Corralation between Apple and LIFE +
Assuming the 90 days trading horizon Apple is expected to generate 3.73 times less return on investment than LIFE +. But when comparing it to its historical volatility, Apple Inc is 2.27 times less risky than LIFE +. It trades about 0.13 of its potential returns per unit of risk. LIFE BANC SPLIT is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 560.00 in LIFE BANC SPLIT on August 29, 2024 and sell it today you would earn a total of 80.00 from holding LIFE BANC SPLIT or generate 14.29% 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. LIFE BANC SPLIT
Performance |
| Timeline |
| Apple Inc |
| LIFE BANC SPLIT |
Apple and LIFE + Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and LIFE +
The main advantage of trading using opposite Apple and LIFE + positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, LIFE + 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 LIFE + will offset losses from the drop in LIFE +'s long position.The idea behind Apple Inc and LIFE BANC SPLIT 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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