Correlation Between Strats SM and Apple
Can any of the company-specific risk be diversified away by investing in both Strats SM 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 Strats SM and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strats SM Trust and Apple Inc, you can compare the effects of market volatilities on Strats SM 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 Strats SM with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strats SM and Apple.
Diversification Opportunities for Strats SM and Apple
Very good diversification
The 3 months correlation between Strats and Apple is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Strats SM Trust and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Strats SM 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 Strats SM Trust 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 Strats SM i.e., Strats SM and Apple go up and down completely randomly.
Pair Corralation between Strats SM and Apple
Considering the 90-day investment horizon Strats SM Trust is expected to generate 0.47 times more return on investment than Apple. However, Strats SM Trust is 2.13 times less risky than Apple. It trades about 0.05 of its potential returns per unit of risk. Apple Inc is currently generating about -0.01 per unit of risk. If you would invest 2,525 in Strats SM Trust on January 26, 2024 and sell it today you would earn a total of 18.00 from holding Strats SM Trust or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strats SM Trust vs. Apple Inc
Performance |
| Timeline |
| Strats SM Trust |
| Apple Inc |
Strats SM and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strats SM and Apple
The main advantage of trading using opposite Strats SM and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strats SM 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.| Strats SM vs. Stevia Nutra Corp | Strats SM vs. Regent Ventures | Strats SM vs. Element Global | Strats SM vs. Affiliated Resources Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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