Correlation Between LEGAL GENERAL and Apple
Can any of the company-specific risk be diversified away by investing in both LEGAL GENERAL 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 LEGAL GENERAL and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LEGAL GENERAL and Apple Inc, you can compare the effects of market volatilities on LEGAL GENERAL 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 LEGAL GENERAL with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEGAL GENERAL and Apple.
Diversification Opportunities for LEGAL GENERAL and Apple
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LEGAL and Apple is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding LEGAL GENERAL and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and LEGAL GENERAL 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 LEGAL GENERAL 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 LEGAL GENERAL i.e., LEGAL GENERAL and Apple go up and down completely randomly.
Pair Corralation between LEGAL GENERAL and Apple
Assuming the 90 days trading horizon LEGAL GENERAL is expected to under-perform the Apple. In addition to that, LEGAL GENERAL is 1.11 times more volatile than Apple Inc. It trades about -0.03 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.29 per unit of volatility. If you would invest 21,345 in Apple Inc on September 23, 2024 and sell it today you would earn a total of 3,005 from holding Apple Inc or generate 14.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LEGAL GENERAL vs. Apple Inc
Performance |
| Timeline |
| LEGAL GENERAL |
| Apple Inc |
LEGAL GENERAL and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEGAL GENERAL and Apple
The main advantage of trading using opposite LEGAL GENERAL and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEGAL GENERAL 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.| LEGAL GENERAL vs. Apple Inc | LEGAL GENERAL vs. Apple Inc | LEGAL GENERAL vs. Apple Inc | LEGAL GENERAL vs. Apple Inc |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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