Correlation Between Apple and SPORTING
Can any of the company-specific risk be diversified away by investing in both Apple and SPORTING 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 SPORTING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and SPORTING, you can compare the effects of market volatilities on Apple and SPORTING 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 SPORTING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and SPORTING.
Diversification Opportunities for Apple and SPORTING
Very good diversification
The 3 months correlation between Apple and SPORTING is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING 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 SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of Apple i.e., Apple and SPORTING go up and down completely randomly.
Pair Corralation between Apple and SPORTING
Assuming the 90 days trading horizon Apple Inc is expected to generate 1.05 times more return on investment than SPORTING. However, Apple is 1.05 times more volatile than SPORTING. It trades about -0.09 of its potential returns per unit of risk. SPORTING is currently generating about -0.1 per unit of risk. If you would invest 23,690 in Apple Inc on November 3, 2024 and sell it today you would lose (945.00) from holding Apple Inc or give up 3.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. SPORTING
Performance |
| Timeline |
| Apple Inc |
| SPORTING |
Apple and SPORTING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and SPORTING
The main advantage of trading using opposite Apple and SPORTING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, SPORTING 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 SPORTING will offset losses from the drop in SPORTING's long position.| Apple vs. ARROW ELECTRONICS | Apple vs. Dairy Farm International | Apple vs. AUST AGRICULTURAL | Apple vs. North American Construction |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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