Correlation Between NYSE Composite and APPLE

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Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and APPLE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and APPLE INC, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of APPLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and APPLE.

Diversification Opportunities for NYSE Composite and APPLE

-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between NYSE and APPLE is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and APPLE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLE INC and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and APPLE go up and down completely randomly.
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Pair Corralation between NYSE Composite and APPLE

Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.79 times more return on investment than APPLE. However, NYSE Composite is 1.79 times more volatile than APPLE INC. It trades about 0.08 of its potential returns per unit of risk. APPLE INC is currently generating about 0.01 per unit of risk. If you would invest  1,529,105  in NYSE Composite on August 30, 2024 and sell it today you would earn a total of  491,877  from holding NYSE Composite or generate 32.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy99.19%
ValuesDaily Returns

NYSE Composite  vs.  APPLE INC

 Performance 
       Timeline  

NYSE Composite and APPLE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NYSE Composite and APPLE

The main advantage of trading using opposite NYSE Composite and APPLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.
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The idea behind NYSE Composite and APPLE INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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