Correlation Between Apple and Aflac Incorporated
Can any of the company-specific risk be diversified away by investing in both Apple and Aflac Incorporated 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 Aflac Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Aflac Incorporated, you can compare the effects of market volatilities on Apple and Aflac Incorporated 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 Aflac Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Aflac Incorporated.
Diversification Opportunities for Apple and Aflac Incorporated
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Apple and Aflac is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Aflac Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aflac Incorporated 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 Aflac Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aflac Incorporated has no effect on the direction of Apple i.e., Apple and Aflac Incorporated go up and down completely randomly.
Pair Corralation between Apple and Aflac Incorporated
Assuming the 90 days trading horizon Apple is expected to generate 1.69 times less return on investment than Aflac Incorporated. But when comparing it to its historical volatility, Apple Inc is 1.17 times less risky than Aflac Incorporated. It trades about 0.18 of its potential returns per unit of risk. Aflac Incorporated is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 9,905 in Aflac Incorporated on August 31, 2024 and sell it today you would earn a total of 935.00 from holding Aflac Incorporated or generate 9.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 95.65% |
Values | Daily Returns |
Apple Inc vs. Aflac Incorporated
Performance |
Timeline |
Apple Inc |
Aflac Incorporated |
Apple and Aflac Incorporated Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Apple and Aflac Incorporated
The main advantage of trading using opposite Apple and Aflac Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Aflac Incorporated 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 Aflac Incorporated will offset losses from the drop in Aflac Incorporated's long position.Apple vs. X Fab Silicon | Apple vs. UPDATE SOFTWARE | Apple vs. ATOSS SOFTWARE | Apple vs. Alfa Financial Software |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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