Correlation Between Trendline and Apple

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Can any of the company-specific risk be diversified away by investing in both Trendline 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 Trendline and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trendline and Apple Inc, you can compare the effects of market volatilities on Trendline 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 Trendline with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trendline and Apple.

Diversification Opportunities for Trendline and Apple

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Trendline and Apple is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Trendline and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Trendline 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 Trendline 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 Trendline i.e., Trendline and Apple go up and down completely randomly.

Pair Corralation between Trendline and Apple

Assuming the 90 days trading horizon Trendline is expected to under-perform the Apple. In addition to that, Trendline is 2.37 times more volatile than Apple Inc. It trades about -0.01 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.01 per unit of volatility. If you would invest  16,388  in Apple Inc on December 30, 2023 and sell it today you would earn a total of  760.00  from holding Apple Inc or generate 4.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy78.95%
ValuesDaily Returns

Trendline  vs.  Apple Inc

 Performance 
       Timeline  
Trendline 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Trendline are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Trendline may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Apple Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Trendline and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Trendline and Apple

The main advantage of trading using opposite Trendline and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trendline 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.
The idea behind Trendline and Apple Inc 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.
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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