Correlation Between Apple and InPlay Oil
Can any of the company-specific risk be diversified away by investing in both Apple and InPlay Oil 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 InPlay Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and InPlay Oil Corp, you can compare the effects of market volatilities on Apple and InPlay Oil 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 InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and InPlay Oil.
Diversification Opportunities for Apple and InPlay Oil
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Apple and InPlay is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp 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 InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Apple i.e., Apple and InPlay Oil go up and down completely randomly.
Pair Corralation between Apple and InPlay Oil
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.5 times more return on investment than InPlay Oil. However, Apple Inc is 1.99 times less risky than InPlay Oil. It trades about -0.04 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.03 per unit of risk. If you would invest 21,940 in Apple Inc on October 26, 2024 and sell it today you would lose (510.00) from holding Apple Inc or give up 2.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. InPlay Oil Corp
Performance |
| Timeline |
| Apple Inc |
| InPlay Oil Corp |
Apple and InPlay Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and InPlay Oil
The main advantage of trading using opposite Apple and InPlay Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, InPlay Oil 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 InPlay Oil will offset losses from the drop in InPlay Oil's long position.| Apple vs. International Consolidated Airlines | Apple vs. INSURANCE AUST GRP | Apple vs. Reinsurance Group of | Apple vs. SBI Insurance Group |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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