Correlation Between Apple and WINDSTREAM HLDGS
Can any of the company-specific risk be diversified away by investing in both Apple and WINDSTREAM HLDGS 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 WINDSTREAM HLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and WINDSTREAM HLDGS, you can compare the effects of market volatilities on Apple and WINDSTREAM HLDGS 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 WINDSTREAM HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and WINDSTREAM HLDGS.
Diversification Opportunities for Apple and WINDSTREAM HLDGS
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Apple and WINDSTREAM is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and WINDSTREAM HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WINDSTREAM HLDGS 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 WINDSTREAM HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WINDSTREAM HLDGS has no effect on the direction of Apple i.e., Apple and WINDSTREAM HLDGS go up and down completely randomly.
Pair Corralation between Apple and WINDSTREAM HLDGS
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.14 times more return on investment than WINDSTREAM HLDGS. However, Apple Inc is 7.34 times less risky than WINDSTREAM HLDGS. It trades about 0.23 of its potential returns per unit of risk. WINDSTREAM HLDGS is currently generating about -0.18 per unit of risk. If you would invest 20,820 in Apple Inc on September 29, 2024 and sell it today you would earn a total of 3,780 from holding Apple Inc or generate 18.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. WINDSTREAM HLDGS
Performance |
| Timeline |
| Apple Inc |
| WINDSTREAM HLDGS |
Apple and WINDSTREAM HLDGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and WINDSTREAM HLDGS
The main advantage of trading using opposite Apple and WINDSTREAM HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, WINDSTREAM HLDGS 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 WINDSTREAM HLDGS will offset losses from the drop in WINDSTREAM HLDGS's long position.The idea behind Apple Inc and WINDSTREAM HLDGS 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.| WINDSTREAM HLDGS vs. Apple Inc | WINDSTREAM HLDGS vs. Apple Inc | WINDSTREAM HLDGS vs. Apple Inc | WINDSTREAM HLDGS vs. Apple Inc |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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