Correlation Between Apple and SPIRIT AIRLINES
Can any of the company-specific risk be diversified away by investing in both Apple and SPIRIT AIRLINES 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 SPIRIT AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and SPIRIT AIRLINES, you can compare the effects of market volatilities on Apple and SPIRIT AIRLINES 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 SPIRIT AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and SPIRIT AIRLINES.
Diversification Opportunities for Apple and SPIRIT AIRLINES
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Apple and SPIRIT is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and SPIRIT AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPIRIT AIRLINES 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 SPIRIT AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPIRIT AIRLINES has no effect on the direction of Apple i.e., Apple and SPIRIT AIRLINES go up and down completely randomly.
Pair Corralation between Apple and SPIRIT AIRLINES
Assuming the 90 days trading horizon Apple is expected to generate 2.99 times less return on investment than SPIRIT AIRLINES. But when comparing it to its historical volatility, Apple Inc is 14.94 times less risky than SPIRIT AIRLINES. It trades about 0.23 of its potential returns per unit of risk. SPIRIT AIRLINES is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 145.00 in SPIRIT AIRLINES on September 13, 2024 and sell it today you would lose (49.00) from holding SPIRIT AIRLINES or give up 33.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 79.07% |
| Values | Daily Returns |
Apple Inc vs. SPIRIT AIRLINES
Performance |
| Timeline |
| Apple Inc |
| SPIRIT AIRLINES |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Apple and SPIRIT AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and SPIRIT AIRLINES
The main advantage of trading using opposite Apple and SPIRIT AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, SPIRIT AIRLINES 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 SPIRIT AIRLINES will offset losses from the drop in SPIRIT AIRLINES's long position.| Apple vs. Entravision Communications | Apple vs. NORTHEAST UTILITIES | Apple vs. Tower One Wireless | Apple vs. Highlight Communications AG |
| SPIRIT AIRLINES vs. Apple Inc | SPIRIT AIRLINES vs. Apple Inc | SPIRIT AIRLINES vs. Apple Inc | SPIRIT AIRLINES 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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