Correlation Between Apple and STORE ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both Apple and STORE ELECTRONIC 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 STORE ELECTRONIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and STORE ELECTRONIC, you can compare the effects of market volatilities on Apple and STORE ELECTRONIC 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 STORE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and STORE ELECTRONIC.
Diversification Opportunities for Apple and STORE ELECTRONIC
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Apple and STORE is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC 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 STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of Apple i.e., Apple and STORE ELECTRONIC go up and down completely randomly.
Pair Corralation between Apple and STORE ELECTRONIC
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.81 times more return on investment than STORE ELECTRONIC. However, Apple Inc is 1.23 times less risky than STORE ELECTRONIC. It trades about 0.24 of its potential returns per unit of risk. STORE ELECTRONIC is currently generating about -0.03 per unit of risk. If you would invest 21,807 in Apple Inc on November 27, 2024 and sell it today you would earn a total of 1,838 from holding Apple Inc or generate 8.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. STORE ELECTRONIC
Performance |
| Timeline |
| Apple Inc |
| STORE ELECTRONIC |
Apple and STORE ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and STORE ELECTRONIC
The main advantage of trading using opposite Apple and STORE ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, STORE ELECTRONIC 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 STORE ELECTRONIC will offset losses from the drop in STORE ELECTRONIC's long position.| Apple vs. United Utilities Group | Apple vs. Diversified Healthcare Trust | Apple vs. New Residential Investment | Apple vs. Guangdong Investment Limited |
| STORE ELECTRONIC vs. PARKEN SPORT ENT | STORE ELECTRONIC vs. TOREX SEMICONDUCTOR LTD | STORE ELECTRONIC vs. Magnachip Semiconductor | STORE ELECTRONIC vs. Yuexiu Transport Infrastructure |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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