Correlation Between International Consolidated and Apple
Can any of the company-specific risk be diversified away by investing in both International Consolidated 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 International Consolidated and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and Apple Inc, you can compare the effects of market volatilities on International Consolidated 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 Consolidated with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Apple.
Diversification Opportunities for International Consolidated and Apple
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between International and Apple is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and International Consolidated 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 Consolidated Airlines 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 International Consolidated i.e., International Consolidated and Apple go up and down completely randomly.
Pair Corralation between International Consolidated and Apple
Assuming the 90 days horizon International Consolidated Airlines is expected to generate 1.63 times more return on investment than Apple. However, International Consolidated is 1.63 times more volatile than Apple Inc. It trades about 0.01 of its potential returns per unit of risk. Apple Inc is currently generating about -0.04 per unit of risk. If you would invest 395.00 in International Consolidated Airlines on January 17, 2024 and sell it today you would earn a total of 3.00 from holding International Consolidated Airlines or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.46% |
| Values | Daily Returns |
International Consolidated Air vs. Apple Inc
Performance |
| Timeline |
| International Consolidated |
| Apple Inc |
International Consolidated and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Apple
The main advantage of trading using opposite International Consolidated and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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.| International Consolidated vs. Bank Mandiri Persero | International Consolidated vs. Bank Mandiri Persero | International Consolidated vs. PT Bank Rakyat | International Consolidated vs. Bank Rakyat |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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