Correlation Between Apple and Strattec Security
Can any of the company-specific risk be diversified away by investing in both Apple and Strattec Security 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 Strattec Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Strattec Security Corp, you can compare the effects of market volatilities on Apple and Strattec Security 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 Strattec Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Strattec Security.
Diversification Opportunities for Apple and Strattec Security
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and Strattec is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Strattec Security Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strattec Security Corp 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 Strattec Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strattec Security Corp has no effect on the direction of Apple i.e., Apple and Strattec Security go up and down completely randomly.
Pair Corralation between Apple and Strattec Security
Assuming the 90 days trading horizon Apple is expected to generate 4.13 times less return on investment than Strattec Security. But when comparing it to its historical volatility, Apple Inc is 2.92 times less risky than Strattec Security. It trades about 0.09 of its potential returns per unit of risk. Strattec Security Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,620 in Strattec Security Corp on August 27, 2024 and sell it today you would earn a total of 300.00 from holding Strattec Security Corp or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Strattec Security Corp
Performance |
| Timeline |
| Apple Inc |
| Strattec Security Corp |
Apple and Strattec Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Strattec Security
The main advantage of trading using opposite Apple and Strattec Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Strattec Security 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 Strattec Security will offset losses from the drop in Strattec Security's long position.| Apple vs. ARROW ELECTRONICS | Apple vs. Richardson Electronics | Apple vs. STORE ELECTRONIC | Apple vs. Samsung Electronics Co |
| Strattec Security vs. INSURANCE AUST GRP | Strattec Security vs. PennantPark Investment | Strattec Security vs. Genco Shipping Trading | Strattec Security vs. British American Tobacco |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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