Correlation Between Apple and NORTHEAST UTILITIES
Can any of the company-specific risk be diversified away by investing in both Apple and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and NORTHEAST UTILITIES, you can compare the effects of market volatilities on Apple and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and NORTHEAST UTILITIES.
Diversification Opportunities for Apple and NORTHEAST UTILITIES
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Apple and NORTHEAST is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST UTILITIES 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 NORTHEAST UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHEAST UTILITIES has no effect on the direction of Apple i.e., Apple and NORTHEAST UTILITIES go up and down completely randomly.
Pair Corralation between Apple and NORTHEAST UTILITIES
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.95 times more return on investment than NORTHEAST UTILITIES. However, Apple Inc is 1.05 times less risky than NORTHEAST UTILITIES. It trades about 0.05 of its potential returns per unit of risk. NORTHEAST UTILITIES is currently generating about 0.0 per unit of risk. If you would invest 17,475 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 4,415 from holding Apple Inc or generate 25.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. NORTHEAST UTILITIES
Performance |
| Timeline |
| Apple Inc |
| NORTHEAST UTILITIES |
Apple and NORTHEAST UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and NORTHEAST UTILITIES
The main advantage of trading using opposite Apple and NORTHEAST UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, NORTHEAST UTILITIES 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 NORTHEAST UTILITIES will offset losses from the drop in NORTHEAST UTILITIES's long position.| Apple vs. Cass Information Systems | Apple vs. Hyrican Informationssysteme Aktiengesellschaft | Apple vs. PUBLIC STORAGE PRFO | Apple vs. DOCDATA |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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