Correlation Between Smiths Group and Apple
Can any of the company-specific risk be diversified away by investing in both Smiths Group 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 Smiths Group and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smiths Group plc and Apple Inc, you can compare the effects of market volatilities on Smiths Group 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 Smiths Group with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smiths Group and Apple.
Diversification Opportunities for Smiths Group and Apple
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Smiths and Apple is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Smiths Group plc and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Smiths Group 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 Smiths Group plc 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 Smiths Group i.e., Smiths Group and Apple go up and down completely randomly.
Pair Corralation between Smiths Group and Apple
Assuming the 90 days trading horizon Smiths Group is expected to generate 2.09 times less return on investment than Apple. But when comparing it to its historical volatility, Smiths Group plc is 1.12 times less risky than Apple. It trades about 0.03 of its potential returns per unit of risk. Apple Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 16,699 in Apple Inc on September 2, 2024 and sell it today you would earn a total of 5,736 from holding Apple Inc or generate 34.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smiths Group plc vs. Apple Inc
Performance |
| Timeline |
| Smiths Group plc |
| Apple Inc |
Smiths Group and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smiths Group and Apple
The main advantage of trading using opposite Smiths Group and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smiths Group 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.| Smiths Group vs. Rogers Communications | Smiths Group vs. Ribbon Communications | Smiths Group vs. Texas Roadhouse | Smiths Group vs. INTERSHOP Communications Aktiengesellschaft |
| Apple vs. Strategic Investments AS | Apple vs. Gladstone Investment | Apple vs. SEI INVESTMENTS | Apple vs. EAT WELL INVESTMENT |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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