Correlation Between Apple and FIRSTRAND
Can any of the company-specific risk be diversified away by investing in both Apple and FIRSTRAND 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 FIRSTRAND into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and FIRSTRAND, you can compare the effects of market volatilities on Apple and FIRSTRAND 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 FIRSTRAND. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and FIRSTRAND.
Diversification Opportunities for Apple and FIRSTRAND
Average diversification
The 3 months correlation between Apple and FIRSTRAND is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and FIRSTRAND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRSTRAND 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 FIRSTRAND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRSTRAND has no effect on the direction of Apple i.e., Apple and FIRSTRAND go up and down completely randomly.
Pair Corralation between Apple and FIRSTRAND
Assuming the 90 days trading horizon Apple Inc is expected to generate 1.17 times more return on investment than FIRSTRAND. However, Apple is 1.17 times more volatile than FIRSTRAND. It trades about 0.23 of its potential returns per unit of risk. FIRSTRAND is currently generating about -0.15 per unit of risk. If you would invest 22,026 in Apple Inc on November 28, 2024 and sell it today you would earn a total of 1,564 from holding Apple Inc or generate 7.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Apple Inc vs. FIRSTRAND
Performance |
| Timeline |
| Apple Inc |
| FIRSTRAND |
Apple and FIRSTRAND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and FIRSTRAND
The main advantage of trading using opposite Apple and FIRSTRAND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, FIRSTRAND 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 FIRSTRAND will offset losses from the drop in FIRSTRAND's long position.| Apple vs. CHINA SOUTHN AIR H | Apple vs. NORWEGIAN AIR SHUT | Apple vs. British American Tobacco | Apple vs. Enter Air SA |
| FIRSTRAND vs. SOGECLAIR SA INH | FIRSTRAND vs. Phibro Animal Health | FIRSTRAND vs. COMM HEALTH SYSTEMS | FIRSTRAND vs. SBM OFFSHORE |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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