Correlation Between CREF Inflation and Apple
Can any of the company-specific risk be diversified away by investing in both CREF Inflation 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 CREF Inflation and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CREF Inflation Linked Bond and Apple Inc, you can compare the effects of market volatilities on CREF Inflation 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 CREF Inflation with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of CREF Inflation and Apple.
Diversification Opportunities for CREF Inflation and Apple
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between CREF and Apple is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CREF Inflation Linked Bond and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and CREF Inflation 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 CREF Inflation Linked Bond 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 CREF Inflation i.e., CREF Inflation and Apple go up and down completely randomly.
Pair Corralation between CREF Inflation and Apple
Assuming the 90 days trading horizon CREF Inflation is expected to generate 12.41 times less return on investment than Apple. But when comparing it to its historical volatility, CREF Inflation Linked Bond is 4.95 times less risky than Apple. It trades about 0.19 of its potential returns per unit of risk. Apple Inc is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 22,177 in Apple Inc on September 5, 2024 and sell it today you would earn a total of 2,088 from holding Apple Inc or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
CREF Inflation Linked Bond vs. Apple Inc
Performance |
| Timeline |
| CREF Inflation Linked |
| Apple Inc |
CREF Inflation and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CREF Inflation and Apple
The main advantage of trading using opposite CREF Inflation and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CREF Inflation 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.| CREF Inflation vs. Pekin Life Insurance | CREF Inflation vs. Highway Holdings Limited | CREF Inflation vs. Hurco Companies | CREF Inflation vs. The Hanover Insurance |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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