Correlation Between Apple and JDS UNIPHASE
Can any of the company-specific risk be diversified away by investing in both Apple and JDS UNIPHASE 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 JDS UNIPHASE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and JDS UNIPHASE, you can compare the effects of market volatilities on Apple and JDS UNIPHASE 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 JDS UNIPHASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and JDS UNIPHASE.
Diversification Opportunities for Apple and JDS UNIPHASE
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and JDS is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and JDS UNIPHASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JDS UNIPHASE 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 JDS UNIPHASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JDS UNIPHASE has no effect on the direction of Apple i.e., Apple and JDS UNIPHASE go up and down completely randomly.
Pair Corralation between Apple and JDS UNIPHASE
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.5 times more return on investment than JDS UNIPHASE. However, Apple Inc is 1.99 times less risky than JDS UNIPHASE. It trades about 0.47 of its potential returns per unit of risk. JDS UNIPHASE is currently generating about 0.09 per unit of risk. If you would invest 20,371 in Apple Inc on September 4, 2024 and sell it today you would earn a total of 2,444 from holding Apple Inc or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Apple Inc vs. JDS UNIPHASE
Performance |
| Timeline |
| Apple Inc |
| JDS UNIPHASE |
Apple and JDS UNIPHASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and JDS UNIPHASE
The main advantage of trading using opposite Apple and JDS UNIPHASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, JDS UNIPHASE 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 JDS UNIPHASE will offset losses from the drop in JDS UNIPHASE's long position.| Apple vs. CDL INVESTMENT | Apple vs. ULTRA CLEAN HLDGS | Apple vs. Eidesvik Offshore ASA | Apple vs. SBM OFFSHORE |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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