Correlation Between Apple and E3 LITHIUM
Can any of the company-specific risk be diversified away by investing in both Apple and E3 LITHIUM 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 E3 LITHIUM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and E3 LITHIUM LTD, you can compare the effects of market volatilities on Apple and E3 LITHIUM 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 E3 LITHIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and E3 LITHIUM.
Diversification Opportunities for Apple and E3 LITHIUM
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and OW3 is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and E3 LITHIUM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E3 LITHIUM LTD 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 E3 LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E3 LITHIUM LTD has no effect on the direction of Apple i.e., Apple and E3 LITHIUM go up and down completely randomly.
Pair Corralation between Apple and E3 LITHIUM
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.61 times more return on investment than E3 LITHIUM. However, Apple Inc is 1.63 times less risky than E3 LITHIUM. It trades about -0.05 of its potential returns per unit of risk. E3 LITHIUM LTD is currently generating about -0.08 per unit of risk. If you would invest 23,610 in Apple Inc on November 4, 2024 and sell it today you would lose (595.00) from holding Apple Inc or give up 2.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. E3 LITHIUM LTD
Performance |
| Timeline |
| Apple Inc |
| E3 LITHIUM LTD |
Apple and E3 LITHIUM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and E3 LITHIUM
The main advantage of trading using opposite Apple and E3 LITHIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, E3 LITHIUM 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 E3 LITHIUM will offset losses from the drop in E3 LITHIUM's long position.| Apple vs. Constellation Software | Apple vs. MAVEN WIRELESS SWEDEN | Apple vs. VIRGIN WINES UK | Apple vs. ITALIAN WINE BRANDS |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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