Correlation Between Apple and Elspec
Can any of the company-specific risk be diversified away by investing in both Apple and Elspec 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 Elspec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Elspec, you can compare the effects of market volatilities on Apple and Elspec 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 Elspec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Elspec.
Diversification Opportunities for Apple and Elspec
Very good diversification
The 3 months correlation between Apple and Elspec is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Elspec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elspec 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 Elspec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elspec has no effect on the direction of Apple i.e., Apple and Elspec go up and down completely randomly.
Pair Corralation between Apple and Elspec
Given the investment horizon of 90 days Apple Inc is expected to generate 0.46 times more return on investment than Elspec. However, Apple Inc is 2.15 times less risky than Elspec. It trades about -0.19 of its potential returns per unit of risk. Elspec is currently generating about -0.28 per unit of risk. If you would invest 17,867 in Apple Inc on January 20, 2024 and sell it today you would lose (1,163) from holding Apple Inc or give up 6.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Apple Inc vs. Elspec
Performance |
| Timeline |
| Apple Inc |
| Elspec |
Apple and Elspec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Elspec
The main advantage of trading using opposite Apple and Elspec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Elspec 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 Elspec will offset losses from the drop in Elspec's long position.The idea behind Apple Inc and Elspec 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.| Elspec vs. EN Shoham Business | Elspec vs. Accel Solutions Group | Elspec vs. Mivtach Shamir | Elspec vs. Rani Zim Shopping |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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