Correlation Between Apple and Cape Lambert
Can any of the company-specific risk be diversified away by investing in both Apple and Cape Lambert 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 Cape Lambert into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Cape Lambert Resources, you can compare the effects of market volatilities on Apple and Cape Lambert 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 Cape Lambert. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Cape Lambert.
Diversification Opportunities for Apple and Cape Lambert
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and Cape is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Cape Lambert Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cape Lambert Resources 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 Cape Lambert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cape Lambert Resources has no effect on the direction of Apple i.e., Apple and Cape Lambert go up and down completely randomly.
Pair Corralation between Apple and Cape Lambert
Assuming the 90 days trading horizon Apple is expected to generate 4.75 times less return on investment than Cape Lambert. But when comparing it to its historical volatility, Apple Inc is 14.46 times less risky than Cape Lambert. It trades about 0.59 of its potential returns per unit of risk. Cape Lambert Resources is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1.04 in Cape Lambert Resources on September 19, 2024 and sell it today you would earn a total of 0.46 from holding Cape Lambert Resources or generate 44.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Cape Lambert Resources
Performance |
| Timeline |
| Apple Inc |
| Cape Lambert Resources |
Apple and Cape Lambert Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Cape Lambert
The main advantage of trading using opposite Apple and Cape Lambert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Cape Lambert 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 Cape Lambert will offset losses from the drop in Cape Lambert's long position.| Apple vs. Ebro Foods SA | Apple vs. PRECISION DRILLING P | Apple vs. Pembina Pipeline Corp | Apple vs. SIEM OFFSHORE NEW |
| Cape Lambert vs. Apple Inc | Cape Lambert vs. Apple Inc | Cape Lambert vs. Apple Inc | Cape Lambert 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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