Correlation Between Apple and BC IRON
Can any of the company-specific risk be diversified away by investing in both Apple and BC IRON 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 BC IRON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and BC IRON, you can compare the effects of market volatilities on Apple and BC IRON 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 BC IRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and BC IRON.
Diversification Opportunities for Apple and BC IRON
Pay attention - limited upside
The 3 months correlation between Apple and BC3 is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and BC IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC IRON 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 BC IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC IRON has no effect on the direction of Apple i.e., Apple and BC IRON go up and down completely randomly.
Pair Corralation between Apple and BC IRON
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.53 times more return on investment than BC IRON. However, Apple Inc is 1.88 times less risky than BC IRON. It trades about 0.13 of its potential returns per unit of risk. BC IRON is currently generating about -0.06 per unit of risk. If you would invest 20,371 in Apple Inc on November 4, 2024 and sell it today you would earn a total of 2,389 from holding Apple Inc or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. BC IRON
Performance |
| Timeline |
| Apple Inc |
| BC IRON |
Apple and BC IRON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and BC IRON
The main advantage of trading using opposite Apple and BC IRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, BC IRON 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 BC IRON will offset losses from the drop in BC IRON's long position.| Apple vs. DISTRICT METALS | Apple vs. Jacquet Metal Service | Apple vs. Harmony Gold Mining | Apple vs. Siamgas And Petrochemicals |
| BC IRON vs. Tower Semiconductor | BC IRON vs. DENTSPLY SIRONA | BC IRON vs. COSMOSTEEL HLDGS | BC IRON vs. Magnachip Semiconductor |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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