Correlation Between Apple and BG Foods
Can any of the company-specific risk be diversified away by investing in both Apple and BG Foods 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 BG Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and BG Foods, you can compare the effects of market volatilities on Apple and BG Foods 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 BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and BG Foods.
Diversification Opportunities for Apple and BG Foods
Very weak diversification
The 3 months correlation between Apple and DHR is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods 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 BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods has no effect on the direction of Apple i.e., Apple and BG Foods go up and down completely randomly.
Pair Corralation between Apple and BG Foods
Assuming the 90 days trading horizon Apple is expected to generate 35.56 times less return on investment than BG Foods. But when comparing it to its historical volatility, Apple Inc is 1.89 times less risky than BG Foods. It trades about 0.01 of its potential returns per unit of risk. BG Foods is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 579.00 in BG Foods on December 9, 2024 and sell it today you would earn a total of 51.00 from holding BG Foods or generate 8.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. BG Foods
Performance |
| Timeline |
| Apple Inc |
| BG Foods |
Apple and BG Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and BG Foods
The main advantage of trading using opposite Apple and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, BG Foods 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 BG Foods will offset losses from the drop in BG Foods' long position.| Apple vs. Ares Management Corp | Apple vs. PKSHA TECHNOLOGY INC | Apple vs. Corporate Travel Management | Apple vs. FARO Technologies |
| BG Foods vs. Auto Trader Group | BG Foods vs. NTG Nordic Transport | BG Foods vs. DICKS Sporting Goods | BG Foods vs. Carsales |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |