Correlation Between AP Mller and Anthem
Can any of the company-specific risk be diversified away by investing in both AP Mller and Anthem 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 AP Mller and Anthem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Mller and Anthem Inc, you can compare the effects of market volatilities on AP Mller and Anthem 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 AP Mller with a short position of Anthem. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Mller and Anthem.
Diversification Opportunities for AP Mller and Anthem
Very good diversification
The 3 months correlation between DP4B and Anthem is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Anthem Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anthem Inc and AP Mller 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 AP Mller are associated (or correlated) with Anthem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anthem Inc has no effect on the direction of AP Mller i.e., AP Mller and Anthem go up and down completely randomly.
Pair Corralation between AP Mller and Anthem
Assuming the 90 days trading horizon AP Mller is expected to under-perform the Anthem. In addition to that, AP Mller is 1.25 times more volatile than Anthem Inc. It trades about -0.46 of its total potential returns per unit of risk. Anthem Inc is currently generating about 0.16 per unit of volatility. If you would invest 35,950 in Anthem Inc on November 6, 2024 and sell it today you would earn a total of 1,750 from holding Anthem Inc or generate 4.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
AP Mller vs. Anthem Inc
Performance |
| Timeline |
| AP Mller |
| Anthem Inc |
AP Mller and Anthem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Mller and Anthem
The main advantage of trading using opposite AP Mller and Anthem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Mller position performs unexpectedly, Anthem 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 Anthem will offset losses from the drop in Anthem's long position.| AP Mller vs. TRAVEL LEISURE DL 01 | AP Mller vs. ARISTOCRAT LEISURE | AP Mller vs. Universal Display | AP Mller vs. Gaming and Leisure |
| Anthem vs. Lendlease Group | Anthem vs. Choice Hotels International | Anthem vs. Dalata Hotel Group | Anthem vs. HYATT HOTELS A |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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