Correlation Between Apple and Natural Health
Can any of the company-specific risk be diversified away by investing in both Apple and Natural Health 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 Natural Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Natural Health Trends, you can compare the effects of market volatilities on Apple and Natural Health 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 Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Natural Health.
Diversification Opportunities for Apple and Natural Health
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and Natural is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Natural Health Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trends 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 Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trends has no effect on the direction of Apple i.e., Apple and Natural Health go up and down completely randomly.
Pair Corralation between Apple and Natural Health
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.46 times more return on investment than Natural Health. However, Apple Inc is 2.17 times less risky than Natural Health. It trades about 0.13 of its potential returns per unit of risk. Natural Health Trends is currently generating about 0.04 per unit of risk. If you would invest 20,740 in Apple Inc on August 30, 2024 and sell it today you would earn a total of 1,455 from holding Apple Inc or generate 7.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Apple Inc vs. Natural Health Trends
Performance |
| Timeline |
| Apple Inc |
| Natural Health Trends |
Apple and Natural Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Natural Health
The main advantage of trading using opposite Apple and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Natural Health 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 Natural Health will offset losses from the drop in Natural Health's long position.| Apple vs. Marie Brizard Wine | Apple vs. NAKED WINES PLC | Apple vs. PKSHA TECHNOLOGY INC | Apple vs. ACCSYS TECHPLC EO |
| Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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