Correlation Between Apple and Vestas Wind
Can any of the company-specific risk be diversified away by investing in both Apple and Vestas Wind 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 Vestas Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Vestas Wind Systems, you can compare the effects of market volatilities on Apple and Vestas Wind 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 Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Vestas Wind.
Diversification Opportunities for Apple and Vestas Wind
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Apple and Vestas is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Vestas Wind Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestas Wind Systems 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 Vestas Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestas Wind Systems has no effect on the direction of Apple i.e., Apple and Vestas Wind go up and down completely randomly.
Pair Corralation between Apple and Vestas Wind
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.55 times more return on investment than Vestas Wind. However, Apple Inc is 1.82 times less risky than Vestas Wind. It trades about 0.06 of its potential returns per unit of risk. Vestas Wind Systems is currently generating about -0.05 per unit of risk. If you would invest 16,395 in Apple Inc on August 31, 2024 and sell it today you would earn a total of 6,000 from holding Apple Inc or generate 36.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Vestas Wind Systems
Performance |
| Timeline |
| Apple Inc |
| Vestas Wind Systems |
Apple and Vestas Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Vestas Wind
The main advantage of trading using opposite Apple and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Vestas Wind 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 Vestas Wind will offset losses from the drop in Vestas Wind's long position.| Apple vs. Datang International Power | Apple vs. DATAGROUP SE | Apple vs. INFORMATION SVC GRP | Apple vs. Consolidated Communications Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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