Correlation Between Apple and Medtronic PLC

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Can any of the company-specific risk be diversified away by investing in both Apple and Medtronic PLC 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 Medtronic PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Medtronic PLC, you can compare the effects of market volatilities on Apple and Medtronic PLC 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 Medtronic PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Medtronic PLC.

Diversification Opportunities for Apple and Medtronic PLC

0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between Apple and Medtronic is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Medtronic PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtronic PLC 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 Medtronic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtronic PLC has no effect on the direction of Apple i.e., Apple and Medtronic PLC go up and down completely randomly.

Pair Corralation between Apple and Medtronic PLC

Assuming the 90 days trading horizon Apple Inc is expected to generate 1.2 times more return on investment than Medtronic PLC. However, Apple is 1.2 times more volatile than Medtronic PLC. It trades about 0.09 of its potential returns per unit of risk. Medtronic PLC is currently generating about 0.06 per unit of risk. If you would invest  20,185  in Apple Inc on September 14, 2024 and sell it today you would earn a total of  3,425  from holding Apple Inc or generate 16.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  Medtronic PLC

 Performance 
       Timeline  
Apple Inc 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Apple displayed solid returns over the last few months and may actually be approaching a breakup point.
Medtronic PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Medtronic PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Medtronic PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Apple and Medtronic PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and Medtronic PLC

The main advantage of trading using opposite Apple and Medtronic PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Medtronic PLC 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 Medtronic PLC will offset losses from the drop in Medtronic PLC's long position.
The idea behind Apple Inc and Medtronic PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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