This module allows you to analyze existing cross correlation between International Business Machines Corporation and Apple. You can compare the effects of market volatilities on International Business 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 International Business with a short position of Apple. See also your portfolio center. Please also check ongoing floating volatility patterns of International Business and Apple.
Considering 30-days investment horizon, International Business Machines Corporation is expected to under-perform the Apple. But the stock apears to be less risky and, when comparing its historical volatility, International Business Machines Corporation is 1.01 times less risky than Apple. The stock trades about -0.27 of its potential returns per unit of risk. The Apple is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest 22,211 in Apple on October 14, 2018 and sell it today you would lose (2,988) from holding Apple or give up 13.45% of portfolio value over 30 days.
Pair Corralation between International Business and Apple
Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Apple Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Apple and International Business 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 International Business Machines Corporation 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 has no effect on the direction of International Business i.e. International Business and Apple go up and down completely randomly.
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