Correlation Between Apple and DAWSON GEOPHYSICAL
Can any of the company-specific risk be diversified away by investing in both Apple and DAWSON GEOPHYSICAL 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 DAWSON GEOPHYSICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and DAWSON GEOPHYSICAL, you can compare the effects of market volatilities on Apple and DAWSON GEOPHYSICAL 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 DAWSON GEOPHYSICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and DAWSON GEOPHYSICAL.
Diversification Opportunities for Apple and DAWSON GEOPHYSICAL
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Apple and DAWSON is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and DAWSON GEOPHYSICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAWSON GEOPHYSICAL 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 DAWSON GEOPHYSICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAWSON GEOPHYSICAL has no effect on the direction of Apple i.e., Apple and DAWSON GEOPHYSICAL go up and down completely randomly.
Pair Corralation between Apple and DAWSON GEOPHYSICAL
Assuming the 90 days trading horizon Apple is expected to generate 1.07 times less return on investment than DAWSON GEOPHYSICAL. But when comparing it to its historical volatility, Apple Inc is 1.17 times less risky than DAWSON GEOPHYSICAL. It trades about 0.21 of its potential returns per unit of risk. DAWSON GEOPHYSICAL is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,639 in DAWSON GEOPHYSICAL on September 12, 2024 and sell it today you would earn a total of 311.00 from holding DAWSON GEOPHYSICAL or generate 18.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.92% |
| Values | Daily Returns |
Apple Inc vs. DAWSON GEOPHYSICAL
Performance |
| Timeline |
| Apple Inc |
| DAWSON GEOPHYSICAL |
Apple and DAWSON GEOPHYSICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and DAWSON GEOPHYSICAL
The main advantage of trading using opposite Apple and DAWSON GEOPHYSICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, DAWSON GEOPHYSICAL 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 DAWSON GEOPHYSICAL will offset losses from the drop in DAWSON GEOPHYSICAL's long position.| Apple vs. Perma Fix Environmental Services | Apple vs. MITSUBISHI STEEL MFG | Apple vs. ALGOMA STEEL GROUP | Apple vs. Aegean Airlines SA |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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