Correlation Between Apple and Globe Trade
Can any of the company-specific risk be diversified away by investing in both Apple and Globe Trade 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 Globe Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Globe Trade Centre, you can compare the effects of market volatilities on Apple and Globe Trade 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 Globe Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Globe Trade.
Diversification Opportunities for Apple and Globe Trade
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and Globe is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Globe Trade Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Trade Centre 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 Globe Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Trade Centre has no effect on the direction of Apple i.e., Apple and Globe Trade go up and down completely randomly.
Pair Corralation between Apple and Globe Trade
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.83 times more return on investment than Globe Trade. However, Apple Inc is 1.2 times less risky than Globe Trade. It trades about 0.1 of its potential returns per unit of risk. Globe Trade Centre is currently generating about 0.03 per unit of risk. If you would invest 12,221 in Apple Inc on September 12, 2024 and sell it today you would earn a total of 11,309 from holding Apple Inc or generate 92.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Globe Trade Centre
Performance |
| Timeline |
| Apple Inc |
| Globe Trade Centre |
Apple and Globe Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Globe Trade
The main advantage of trading using opposite Apple and Globe Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Globe Trade 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 Globe Trade will offset losses from the drop in Globe Trade's long position.| Apple vs. ON SEMICONDUCTOR | Apple vs. Burlington Stores | Apple vs. National Retail Properties | Apple vs. Goosehead Insurance |
| Globe Trade vs. Apple Inc | Globe Trade vs. Apple Inc | Globe Trade vs. Apple Inc | Globe Trade 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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