Correlation Between Spirent Communications and Apple
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Apple Inc, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Apple.
Diversification Opportunities for Spirent Communications and Apple
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Spirent and Apple is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and Apple go up and down completely randomly.
Pair Corralation between Spirent Communications and Apple
Assuming the 90 days horizon Spirent Communications is expected to generate 2.03 times less return on investment than Apple. But when comparing it to its historical volatility, Spirent Communications plc is 1.28 times less risky than Apple. It trades about 0.09 of its potential returns per unit of risk. Apple Inc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 21,489 in Apple Inc on August 29, 2024 and sell it today you would earn a total of 921.00 from holding Apple Inc or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Spirent Communications plc vs. Apple Inc
Performance |
| Timeline |
| Spirent Communications |
| Apple Inc |
Spirent Communications and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Apple
The main advantage of trading using opposite Spirent Communications and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. Verizon Communications | Spirent Communications vs. ATT Inc | Spirent Communications vs. ATT Inc | Spirent Communications vs. Deutsche Telekom AG |
| Apple vs. Cellnex Telecom SA | Apple vs. Spirent Communications plc | Apple vs. Ribbon Communications | Apple vs. Perseus Mining Limited |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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