Correlation Between Apple and HEALTHSTREAM (HL5SG)
Can any of the company-specific risk be diversified away by investing in both Apple and HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM (HL5SG) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and HEALTHSTREAM, you can compare the effects of market volatilities on Apple and HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM (HL5SG). Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and HEALTHSTREAM (HL5SG).
Diversification Opportunities for Apple and HEALTHSTREAM (HL5SG)
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and HEALTHSTREAM is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and HEALTHSTREAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM (HL5SG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEALTHSTREAM (HL5SG) has no effect on the direction of Apple i.e., Apple and HEALTHSTREAM (HL5SG) go up and down completely randomly.
Pair Corralation between Apple and HEALTHSTREAM (HL5SG)
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.7 times more return on investment than HEALTHSTREAM (HL5SG). However, Apple Inc is 1.43 times less risky than HEALTHSTREAM (HL5SG). It trades about 0.02 of its potential returns per unit of risk. HEALTHSTREAM is currently generating about -0.03 per unit of risk. If you would invest 23,500 in Apple Inc on October 12, 2024 and sell it today you would earn a total of 50.00 from holding Apple Inc or generate 0.21% 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. HEALTHSTREAM
Performance |
| Timeline |
| Apple Inc |
| HEALTHSTREAM (HL5SG) |
Apple and HEALTHSTREAM (HL5SG) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and HEALTHSTREAM (HL5SG)
The main advantage of trading using opposite Apple and HEALTHSTREAM (HL5SG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM (HL5SG) will offset losses from the drop in HEALTHSTREAM (HL5SG)'s long position.| Apple vs. Vulcan Materials | Apple vs. VULCAN MATERIALS | Apple vs. Plastic Omnium | Apple vs. Eagle Materials |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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