Correlation Between Apple and BROADWIND ENRGY
Can any of the company-specific risk be diversified away by investing in both Apple and BROADWIND ENRGY 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 BROADWIND ENRGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and BROADWIND ENRGY, you can compare the effects of market volatilities on Apple and BROADWIND ENRGY 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 BROADWIND ENRGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and BROADWIND ENRGY.
Diversification Opportunities for Apple and BROADWIND ENRGY
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Apple and BROADWIND is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and BROADWIND ENRGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADWIND ENRGY 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 BROADWIND ENRGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADWIND ENRGY has no effect on the direction of Apple i.e., Apple and BROADWIND ENRGY go up and down completely randomly.
Pair Corralation between Apple and BROADWIND ENRGY
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.38 times more return on investment than BROADWIND ENRGY. However, Apple Inc is 2.62 times less risky than BROADWIND ENRGY. It trades about 0.04 of its potential returns per unit of risk. BROADWIND ENRGY is currently generating about -0.08 per unit of risk. If you would invest 20,141 in Apple Inc on October 26, 2024 and sell it today you would earn a total of 1,289 from holding Apple Inc or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. BROADWIND ENRGY
Performance |
| Timeline |
| Apple Inc |
| BROADWIND ENRGY |
Apple and BROADWIND ENRGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and BROADWIND ENRGY
The main advantage of trading using opposite Apple and BROADWIND ENRGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, BROADWIND ENRGY 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 BROADWIND ENRGY will offset losses from the drop in BROADWIND ENRGY's long position.| Apple vs. International Consolidated Airlines | Apple vs. INSURANCE AUST GRP | Apple vs. Reinsurance Group of | Apple vs. SBI Insurance Group |
| BROADWIND ENRGY vs. Apple Inc | BROADWIND ENRGY vs. Apple Inc | BROADWIND ENRGY vs. Apple Inc | BROADWIND ENRGY 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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