Correlation Between Empire Metals and Apple
Can any of the company-specific risk be diversified away by investing in both Empire Metals 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 Empire Metals and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Metals Limited and Apple Inc, you can compare the effects of market volatilities on Empire Metals 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 Empire Metals with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and Apple.
Diversification Opportunities for Empire Metals and Apple
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Empire and Apple is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Empire Metals 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 Empire Metals Limited 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 Empire Metals i.e., Empire Metals and Apple go up and down completely randomly.
Pair Corralation between Empire Metals and Apple
Assuming the 90 days trading horizon Empire Metals Limited is expected to under-perform the Apple. But the stock apears to be less risky and, when comparing its historical volatility, Empire Metals Limited is 2.42 times less risky than Apple. The stock trades about -0.19 of its potential returns per unit of risk. The Apple Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 23,169 in Apple Inc on August 26, 2024 and sell it today you would lose (219.00) from holding Apple Inc or give up 0.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire Metals Limited vs. Apple Inc
Performance |
| Timeline |
| Empire Metals Limited |
| Apple Inc |
Empire Metals and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and Apple
The main advantage of trading using opposite Empire Metals and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals 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.| Empire Metals vs. Playtech Plc | Empire Metals vs. HCA Healthcare | Empire Metals vs. Celebrus Technologies plc | Empire Metals vs. Roper Technologies |
| Apple vs. Empire Metals Limited | Apple vs. Check Point Software | Apple vs. Cornish Metals | Apple vs. Central Asia Metals |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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