Correlation Between Apple and LAM RESEARCH
Can any of the company-specific risk be diversified away by investing in both Apple and LAM RESEARCH 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 LAM RESEARCH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and LAM RESEARCH P, you can compare the effects of market volatilities on Apple and LAM RESEARCH 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 LAM RESEARCH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and LAM RESEARCH.
Diversification Opportunities for Apple and LAM RESEARCH
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Apple and LAM is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and LAM RESEARCH P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAM RESEARCH P 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 LAM RESEARCH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAM RESEARCH P has no effect on the direction of Apple i.e., Apple and LAM RESEARCH go up and down completely randomly.
Pair Corralation between Apple and LAM RESEARCH
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.46 times more return on investment than LAM RESEARCH. However, Apple Inc is 2.17 times less risky than LAM RESEARCH. It trades about 0.2 of its potential returns per unit of risk. LAM RESEARCH P is currently generating about 0.09 per unit of risk. If you would invest 20,141 in Apple Inc on September 12, 2024 and sell it today you would earn a total of 3,574 from holding Apple Inc or generate 17.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.31% |
| Values | Daily Returns |
Apple Inc vs. LAM RESEARCH P
Performance |
| Timeline |
| Apple Inc |
| LAM RESEARCH P |
Apple and LAM RESEARCH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and LAM RESEARCH
The main advantage of trading using opposite Apple and LAM RESEARCH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, LAM RESEARCH 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 LAM RESEARCH will offset losses from the drop in LAM RESEARCH's long position.| Apple vs. Entravision Communications | Apple vs. NORTHEAST UTILITIES | Apple vs. Tower One Wireless | Apple vs. Highlight Communications AG |
| LAM RESEARCH vs. Apple Inc | LAM RESEARCH vs. Apple Inc | LAM RESEARCH vs. Apple Inc | LAM RESEARCH 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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