Correlation Between Apple and SPX TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Apple and SPX TECHNOLOGIES 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 SPX TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and SPX TECHNOLOGIES DL, you can compare the effects of market volatilities on Apple and SPX TECHNOLOGIES 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 SPX TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and SPX TECHNOLOGIES.
Diversification Opportunities for Apple and SPX TECHNOLOGIES
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Apple and SPX is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and SPX TECHNOLOGIES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPX TECHNOLOGIES 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 SPX TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPX TECHNOLOGIES has no effect on the direction of Apple i.e., Apple and SPX TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Apple and SPX TECHNOLOGIES
Assuming the 90 days trading horizon Apple is expected to generate 9.35 times less return on investment than SPX TECHNOLOGIES. But when comparing it to its historical volatility, Apple Inc is 2.68 times less risky than SPX TECHNOLOGIES. It trades about 0.04 of its potential returns per unit of risk. SPX TECHNOLOGIES DL is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 14,600 in SPX TECHNOLOGIES DL on August 24, 2024 and sell it today you would earn a total of 1,300 from holding SPX TECHNOLOGIES DL or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. SPX TECHNOLOGIES DL
Performance |
| Timeline |
| Apple Inc |
| SPX TECHNOLOGIES |
Apple and SPX TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and SPX TECHNOLOGIES
The main advantage of trading using opposite Apple and SPX TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, SPX TECHNOLOGIES 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 SPX TECHNOLOGIES will offset losses from the drop in SPX TECHNOLOGIES's long position.| Apple vs. MGIC INVESTMENT | Apple vs. VITEC SOFTWARE GROUP | Apple vs. EAT WELL INVESTMENT | Apple vs. Zijin Mining Group |
| SPX TECHNOLOGIES vs. SCIENCE IN SPORT | SPX TECHNOLOGIES vs. IDP EDUCATION LTD | SPX TECHNOLOGIES vs. USWE SPORTS AB | SPX TECHNOLOGIES vs. TAL Education Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |