Correlation Between ADTRAN Holdings and Apple
Can any of the company-specific risk be diversified away by investing in both ADTRAN Holdings 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 ADTRAN Holdings and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADTRAN Holdings and Apple Inc, you can compare the effects of market volatilities on ADTRAN Holdings 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 ADTRAN Holdings with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADTRAN Holdings and Apple.
Diversification Opportunities for ADTRAN Holdings and Apple
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ADTRAN and Apple is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ADTRAN Holdings and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and ADTRAN Holdings 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 ADTRAN Holdings 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 ADTRAN Holdings i.e., ADTRAN Holdings and Apple go up and down completely randomly.
Pair Corralation between ADTRAN Holdings and Apple
Assuming the 90 days trading horizon ADTRAN Holdings is expected to generate 3.61 times more return on investment than Apple. However, ADTRAN Holdings is 3.61 times more volatile than Apple Inc. It trades about 0.33 of its potential returns per unit of risk. Apple Inc is currently generating about 0.09 per unit of risk. If you would invest 585.00 in ADTRAN Holdings on August 30, 2024 and sell it today you would earn a total of 239.00 from holding ADTRAN Holdings or generate 40.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADTRAN Holdings vs. Apple Inc
Performance |
| Timeline |
| ADTRAN Holdings |
| Apple Inc |
ADTRAN Holdings and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADTRAN Holdings and Apple
The main advantage of trading using opposite ADTRAN Holdings and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADTRAN Holdings 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.| ADTRAN Holdings vs. Apple Inc | ADTRAN Holdings vs. Apple Inc | ADTRAN Holdings vs. Apple Inc | ADTRAN Holdings vs. Apple Inc |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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