Correlation Between Apple and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Apple and STMICROELECTRONICS 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 STMICROELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and STMICROELECTRONICS, you can compare the effects of market volatilities on Apple and STMICROELECTRONICS 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 STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and STMICROELECTRONICS.
Diversification Opportunities for Apple and STMICROELECTRONICS
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and STMICROELECTRONICS is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS 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 STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of Apple i.e., Apple and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between Apple and STMICROELECTRONICS
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.65 times more return on investment than STMICROELECTRONICS. However, Apple Inc is 1.55 times less risky than STMICROELECTRONICS. It trades about 0.1 of its potential returns per unit of risk. STMICROELECTRONICS is currently generating about -0.13 per unit of risk. If you would invest 20,725 in Apple Inc on September 2, 2024 and sell it today you would earn a total of 1,710 from holding Apple Inc or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. STMICROELECTRONICS
Performance |
| Timeline |
| Apple Inc |
| STMICROELECTRONICS |
Apple and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and STMICROELECTRONICS
The main advantage of trading using opposite Apple and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.| Apple vs. Strategic Investments AS | Apple vs. Gladstone Investment | Apple vs. SEI INVESTMENTS | Apple vs. EAT WELL INVESTMENT |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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