Correlation Between Apple and CHENIERE ENERGY
Can any of the company-specific risk be diversified away by investing in both Apple and CHENIERE ENERGY 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 CHENIERE ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and CHENIERE ENERGY, you can compare the effects of market volatilities on Apple and CHENIERE ENERGY 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 CHENIERE ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and CHENIERE ENERGY.
Diversification Opportunities for Apple and CHENIERE ENERGY
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and CHENIERE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and CHENIERE ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHENIERE ENERGY 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 CHENIERE ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHENIERE ENERGY has no effect on the direction of Apple i.e., Apple and CHENIERE ENERGY go up and down completely randomly.
Pair Corralation between Apple and CHENIERE ENERGY
Assuming the 90 days trading horizon Apple is expected to generate 6.36 times less return on investment than CHENIERE ENERGY. But when comparing it to its historical volatility, Apple Inc is 1.62 times less risky than CHENIERE ENERGY. It trades about 0.12 of its potential returns per unit of risk. CHENIERE ENERGY is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest 16,750 in CHENIERE ENERGY on August 30, 2024 and sell it today you would earn a total of 4,260 from holding CHENIERE ENERGY or generate 25.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Apple Inc vs. CHENIERE ENERGY
Performance |
| Timeline |
| Apple Inc |
| CHENIERE ENERGY |
Apple and CHENIERE ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and CHENIERE ENERGY
The main advantage of trading using opposite Apple and CHENIERE ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, CHENIERE ENERGY 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 CHENIERE ENERGY will offset losses from the drop in CHENIERE ENERGY's long position.| Apple vs. PLAYSTUDIOS A DL 0001 | Apple vs. COLUMBIA SPORTSWEAR | Apple vs. LG Display Co | Apple vs. Aedas Homes SA |
| CHENIERE ENERGY vs. Pure Storage | CHENIERE ENERGY vs. DATANG INTL POW | CHENIERE ENERGY vs. CosmoSteel Holdings Limited | CHENIERE ENERGY vs. Data3 Limited |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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