Correlation Between Apple and AECOM TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Apple and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and AECOM TECHNOLOGY, you can compare the effects of market volatilities on Apple and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and AECOM TECHNOLOGY.
Diversification Opportunities for Apple and AECOM TECHNOLOGY
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and AECOM is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and AECOM TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM TECHNOLOGY has no effect on the direction of Apple i.e., Apple and AECOM TECHNOLOGY go up and down completely randomly.
Pair Corralation between Apple and AECOM TECHNOLOGY
Assuming the 90 days trading horizon Apple Inc is expected to generate 1.02 times more return on investment than AECOM TECHNOLOGY. However, Apple is 1.02 times more volatile than AECOM TECHNOLOGY. It trades about 0.07 of its potential returns per unit of risk. AECOM TECHNOLOGY is currently generating about 0.05 per unit of risk. If you would invest 13,771 in Apple Inc on August 24, 2024 and sell it today you would earn a total of 8,244 from holding Apple Inc or generate 59.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. AECOM TECHNOLOGY
Performance |
| Timeline |
| Apple Inc |
| AECOM TECHNOLOGY |
Apple and AECOM TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and AECOM TECHNOLOGY
The main advantage of trading using opposite Apple and AECOM TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, AECOM TECHNOLOGY 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 AECOM TECHNOLOGY will offset losses from the drop in AECOM TECHNOLOGY's long position.| Apple vs. Mitsubishi Gas Chemical | Apple vs. GREENX METALS LTD | Apple vs. KENNAMETAL INC | Apple vs. Evolution Mining Limited |
| AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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