Correlation Between Apple and AES
Can any of the company-specific risk be diversified away by investing in both Apple and AES 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 AES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and The AES, you can compare the effects of market volatilities on Apple and AES 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 AES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and AES.
Diversification Opportunities for Apple and AES
Very good diversification
The 3 months correlation between Apple and AES is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and The AES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES 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 AES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES has no effect on the direction of Apple i.e., Apple and AES go up and down completely randomly.
Pair Corralation between Apple and AES
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.48 times more return on investment than AES. However, Apple Inc is 2.1 times less risky than AES. It trades about 0.06 of its potential returns per unit of risk. The AES is currently generating about -0.37 per unit of risk. If you would invest 21,564 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 326.00 from holding Apple Inc or generate 1.51% 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. The AES
Performance |
| Timeline |
| Apple Inc |
| AES |
Apple and AES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and AES
The main advantage of trading using opposite Apple and AES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, AES 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 AES will offset losses from the drop in AES's long position.| Apple vs. Summit Materials | Apple vs. Lion One Metals | Apple vs. SANOK RUBBER ZY | Apple vs. Goodyear Tire Rubber |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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