Correlation Between Baxter International and Apple
Can any of the company-specific risk be diversified away by investing in both Baxter International and Apple 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 Baxter International and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baxter International and Apple Inc, you can compare the effects of market volatilities on Baxter International and Apple 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 Baxter International with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baxter International and Apple.
Diversification Opportunities for Baxter International and Apple
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baxter and Apple is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Baxter International 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 Baxter International are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Baxter International i.e., Baxter International and Apple go up and down completely randomly.
Pair Corralation between Baxter International and Apple
Assuming the 90 days trading horizon Baxter International is expected to generate 3.69 times less return on investment than Apple. But when comparing it to its historical volatility, Baxter International is 1.28 times less risky than Apple. It trades about 0.06 of its potential returns per unit of risk. Apple Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 342,646 in Apple Inc on September 3, 2024 and sell it today you would earn a total of 145,954 from holding Apple Inc or generate 42.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Baxter International vs. Apple Inc
Performance |
| Timeline |
| Baxter International |
| Apple Inc |
Baxter International and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baxter International and Apple
The main advantage of trading using opposite Baxter International and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baxter International position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Baxter International vs. Monster Beverage Corp | Baxter International vs. Capital One Financial | Baxter International vs. McEwen Mining | Baxter International vs. Samsung Electronics Co |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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