Correlation Between Apple and KAUFMAN ET
Can any of the company-specific risk be diversified away by investing in both Apple and KAUFMAN ET 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 KAUFMAN ET into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and KAUFMAN ET BROAD, you can compare the effects of market volatilities on Apple and KAUFMAN ET 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 KAUFMAN ET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and KAUFMAN ET.
Diversification Opportunities for Apple and KAUFMAN ET
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and KAUFMAN is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and KAUFMAN ET BROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAUFMAN ET BROAD 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 KAUFMAN ET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAUFMAN ET BROAD has no effect on the direction of Apple i.e., Apple and KAUFMAN ET go up and down completely randomly.
Pair Corralation between Apple and KAUFMAN ET
Assuming the 90 days trading horizon Apple Inc is expected to generate 1.01 times more return on investment than KAUFMAN ET. However, Apple is 1.01 times more volatile than KAUFMAN ET BROAD. It trades about 0.14 of its potential returns per unit of risk. KAUFMAN ET BROAD is currently generating about -0.3 per unit of risk. If you would invest 21,489 in Apple Inc on August 29, 2024 and sell it today you would earn a total of 921.00 from holding Apple Inc or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. KAUFMAN ET BROAD
Performance |
| Timeline |
| Apple Inc |
| KAUFMAN ET BROAD |
Apple and KAUFMAN ET Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and KAUFMAN ET
The main advantage of trading using opposite Apple and KAUFMAN ET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, KAUFMAN ET 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 KAUFMAN ET will offset losses from the drop in KAUFMAN ET's long position.| Apple vs. Treasury Wine Estates | Apple vs. Daito Trust Construction | Apple vs. Granite Construction | Apple vs. TITAN MACHINERY |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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