Correlation Between Apple and THERMO FISHER
Can any of the company-specific risk be diversified away by investing in both Apple and THERMO FISHER 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 THERMO FISHER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and THERMO FISHER SCIEN, you can compare the effects of market volatilities on Apple and THERMO FISHER 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 THERMO FISHER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and THERMO FISHER.
Diversification Opportunities for Apple and THERMO FISHER
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Apple and THERMO is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and THERMO FISHER SCIEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THERMO FISHER SCIEN 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 THERMO FISHER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THERMO FISHER SCIEN has no effect on the direction of Apple i.e., Apple and THERMO FISHER go up and down completely randomly.
Pair Corralation between Apple and THERMO FISHER
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.89 times more return on investment than THERMO FISHER. However, Apple Inc is 1.13 times less risky than THERMO FISHER. It trades about 0.06 of its potential returns per unit of risk. THERMO FISHER SCIEN is currently generating about -0.11 per unit of risk. If you would invest 21,599 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 341.00 from holding Apple Inc or generate 1.58% 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. THERMO FISHER SCIEN
Performance |
| Timeline |
| Apple Inc |
| THERMO FISHER SCIEN |
Apple and THERMO FISHER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and THERMO FISHER
The main advantage of trading using opposite Apple and THERMO FISHER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, THERMO FISHER 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 THERMO FISHER will offset losses from the drop in THERMO FISHER's long position.The idea behind Apple Inc and THERMO FISHER SCIEN pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| THERMO FISHER vs. Eastman Chemical | THERMO FISHER vs. SOUTHWEST AIRLINES | THERMO FISHER vs. United Airlines Holdings | THERMO FISHER vs. Sekisui Chemical Co |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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