Correlation Between Apple and AMP
Can any of the company-specific risk be diversified away by investing in both Apple and AMP 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 AMP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and AMP, you can compare the effects of market volatilities on Apple and AMP 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 AMP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and AMP.
Diversification Opportunities for Apple and AMP
Very poor diversification
The 3 months correlation between Apple and AMP is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and AMP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP 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 AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP has no effect on the direction of Apple i.e., Apple and AMP go up and down completely randomly.
Pair Corralation between Apple and AMP
Assuming the 90 days trading horizon Apple is expected to generate 2.55 times less return on investment than AMP. But when comparing it to its historical volatility, Apple Inc is 1.66 times less risky than AMP. It trades about 0.07 of its potential returns per unit of risk. AMP is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 53.00 in AMP on September 2, 2024 and sell it today you would earn a total of 41.00 from holding AMP or generate 77.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. AMP
Performance |
| Timeline |
| Apple Inc |
| AMP |
Apple and AMP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and AMP
The main advantage of trading using opposite Apple and AMP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, AMP 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 AMP will offset losses from the drop in AMP's long position.| Apple vs. British American Tobacco | Apple vs. TAL Education Group | Apple vs. G8 EDUCATION | Apple vs. Laureate Education |
| AMP vs. SIVERS SEMICONDUCTORS AB | AMP vs. Darden Restaurants | AMP vs. Reliance Steel Aluminum | AMP vs. Q2M Managementberatung AG |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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