Correlation Between Apple and WINMARK
Can any of the company-specific risk be diversified away by investing in both Apple and WINMARK 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 WINMARK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and WINMARK, you can compare the effects of market volatilities on Apple and WINMARK 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 WINMARK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and WINMARK.
Diversification Opportunities for Apple and WINMARK
Poor diversification
The 3 months correlation between Apple and WINMARK is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and WINMARK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WINMARK 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 WINMARK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WINMARK has no effect on the direction of Apple i.e., Apple and WINMARK go up and down completely randomly.
Pair Corralation between Apple and WINMARK
Assuming the 90 days trading horizon Apple is expected to generate 1.16 times less return on investment than WINMARK. But when comparing it to its historical volatility, Apple Inc is 1.29 times less risky than WINMARK. It trades about 0.08 of its potential returns per unit of risk. WINMARK is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 22,161 in WINMARK on September 2, 2024 and sell it today you would earn a total of 16,639 from holding WINMARK or generate 75.08% 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. WINMARK
Performance |
| Timeline |
| Apple Inc |
| WINMARK |
Apple and WINMARK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and WINMARK
The main advantage of trading using opposite Apple and WINMARK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, WINMARK 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 WINMARK will offset losses from the drop in WINMARK's long position.| Apple vs. British American Tobacco | Apple vs. TAL Education Group | Apple vs. G8 EDUCATION | Apple vs. Laureate Education |
| WINMARK vs. Magnachip Semiconductor | WINMARK vs. Internet Thailand PCL | WINMARK vs. KRISPY KREME DL 01 | WINMARK vs. Entravision Communications |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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