Correlation Between Apple and INDUSTRIAL MINERALS
Can any of the company-specific risk be diversified away by investing in both Apple and INDUSTRIAL MINERALS 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 INDUSTRIAL MINERALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and INDUSTRIAL MINERALS LTD, you can compare the effects of market volatilities on Apple and INDUSTRIAL MINERALS 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 INDUSTRIAL MINERALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and INDUSTRIAL MINERALS.
Diversification Opportunities for Apple and INDUSTRIAL MINERALS
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Apple and INDUSTRIAL is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and INDUSTRIAL MINERALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDUSTRIAL MINERALS LTD 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 INDUSTRIAL MINERALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDUSTRIAL MINERALS LTD has no effect on the direction of Apple i.e., Apple and INDUSTRIAL MINERALS go up and down completely randomly.
Pair Corralation between Apple and INDUSTRIAL MINERALS
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.22 times more return on investment than INDUSTRIAL MINERALS. However, Apple Inc is 4.61 times less risky than INDUSTRIAL MINERALS. It trades about -0.45 of its potential returns per unit of risk. INDUSTRIAL MINERALS LTD is currently generating about -0.24 per unit of risk. If you would invest 24,495 in Apple Inc on October 25, 2024 and sell it today you would lose (3,115) from holding Apple Inc or give up 12.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Apple Inc vs. INDUSTRIAL MINERALS LTD
Performance |
| Timeline |
| Apple Inc |
| INDUSTRIAL MINERALS LTD |
Apple and INDUSTRIAL MINERALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and INDUSTRIAL MINERALS
The main advantage of trading using opposite Apple and INDUSTRIAL MINERALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, INDUSTRIAL MINERALS 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 INDUSTRIAL MINERALS will offset losses from the drop in INDUSTRIAL MINERALS's long position.| Apple vs. Global Ship Lease | Apple vs. Air Lease | Apple vs. SCANSOURCE | Apple vs. GRENKELEASING Dusseldorf |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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