Correlation Between Apple and United Parcel
Can any of the company-specific risk be diversified away by investing in both Apple and United Parcel 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 Apple and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and United Parcel Service, you can compare the effects of market volatilities on Apple and United Parcel 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 Apple with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and United Parcel.
Diversification Opportunities for Apple and United Parcel
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Apple and United is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service and Apple 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 Apple Inc are associated (or correlated) with United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Apple i.e., Apple and United Parcel go up and down completely randomly.
Pair Corralation between Apple and United Parcel
Given the investment horizon of 90 days Apple Inc is expected to generate 0.65 times more return on investment than United Parcel. However, Apple Inc is 1.53 times less risky than United Parcel. It trades about -0.1 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.15 per unit of risk. If you would invest 17,085 in Apple Inc on January 24, 2024 and sell it today you would lose (501.00) from holding Apple Inc or give up 2.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Apple Inc vs. United Parcel Service
Performance |
| Timeline |
| Apple Inc |
| United Parcel Service |
Apple and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and United Parcel
The main advantage of trading using opposite Apple and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.The idea behind Apple Inc and United Parcel Service 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.| United Parcel vs. JB Hunt Transport | United Parcel vs. Aquagold International | United Parcel vs. Thrivent High Yield | United Parcel vs. Morningstar Unconstrained Allocation |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |