Correlation Between Apple and Grand Canyon
Can any of the company-specific risk be diversified away by investing in both Apple and Grand Canyon 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 Grand Canyon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Grand Canyon Education, you can compare the effects of market volatilities on Apple and Grand Canyon 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 Grand Canyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Grand Canyon.
Diversification Opportunities for Apple and Grand Canyon
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and Grand is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Grand Canyon Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canyon Education 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 Grand Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canyon Education has no effect on the direction of Apple i.e., Apple and Grand Canyon go up and down completely randomly.
Pair Corralation between Apple and Grand Canyon
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.72 times more return on investment than Grand Canyon. However, Apple Inc is 1.4 times less risky than Grand Canyon. It trades about 0.13 of its potential returns per unit of risk. Grand Canyon Education is currently generating about 0.07 per unit of risk. If you would invest 17,722 in Apple Inc on September 1, 2024 and sell it today you would earn a total of 4,673 from holding Apple Inc or generate 26.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Grand Canyon Education
Performance |
| Timeline |
| Apple Inc |
| Grand Canyon Education |
Apple and Grand Canyon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Grand Canyon
The main advantage of trading using opposite Apple and Grand Canyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Grand Canyon 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 Grand Canyon will offset losses from the drop in Grand Canyon's long position.| Apple vs. STMicroelectronics NV | Apple vs. Strategic Education | Apple vs. Arrow Electronics | Apple vs. CAREER EDUCATION |
| Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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