Correlation Between Apple and ShotSpotter
Can any of the company-specific risk be diversified away by investing in both Apple and ShotSpotter 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 ShotSpotter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and ShotSpotter, you can compare the effects of market volatilities on Apple and ShotSpotter 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 ShotSpotter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and ShotSpotter.
Diversification Opportunities for Apple and ShotSpotter
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and ShotSpotter is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ShotSpotter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ShotSpotter 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 ShotSpotter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ShotSpotter has no effect on the direction of Apple i.e., Apple and ShotSpotter go up and down completely randomly.
Pair Corralation between Apple and ShotSpotter
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.41 times more return on investment than ShotSpotter. However, Apple Inc is 2.47 times less risky than ShotSpotter. It trades about 0.12 of its potential returns per unit of risk. ShotSpotter is currently generating about -0.04 per unit of risk. If you would invest 17,371 in Apple Inc on August 24, 2024 and sell it today you would earn a total of 4,449 from holding Apple Inc or generate 25.61% 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. ShotSpotter
Performance |
| Timeline |
| Apple Inc |
| ShotSpotter |
Apple and ShotSpotter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and ShotSpotter
The main advantage of trading using opposite Apple and ShotSpotter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, ShotSpotter 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 ShotSpotter will offset losses from the drop in ShotSpotter's long position.The idea behind Apple Inc and ShotSpotter 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.| ShotSpotter vs. Strategic Investments AS | ShotSpotter vs. CapitaLand Investment Limited | ShotSpotter vs. Apollo Investment Corp | ShotSpotter vs. FEMALE HEALTH |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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