Correlation Between Apple and InterRent Real

Can any of the company-specific risk be diversified away by investing in both Apple and InterRent Real 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 InterRent Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc CDR and InterRent Real Estate, you can compare the effects of market volatilities on Apple and InterRent Real 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 InterRent Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and InterRent Real.

Diversification Opportunities for Apple and InterRent Real

0.27

Correlation Coefficient

Apple  InterRent Real

Modest diversification

The 3 months correlation between Apple and InterRent is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and InterRent Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterRent Real Estate 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 CDR are associated (or correlated) with InterRent Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterRent Real Estate has no effect on the direction of Apple i.e., Apple and InterRent Real go up and down completely randomly.

Pair Corralation between Apple and InterRent Real

Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 1.09 times more return on investment than InterRent Real. However, Apple is 1.09 times more volatile than InterRent Real Estate. It trades about -0.01 of its potential returns per unit of risk. InterRent Real Estate is currently generating about -0.38 per unit of risk. If you would invest  2,517  in Apple Inc CDR on January 26, 2024 and sell it today you would lose (16.00) from holding Apple Inc CDR or give up 0.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Apple Inc CDR  vs.  InterRent Real Estate

Apple Inc CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

InterRent Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InterRent Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Apple and InterRent Real

The main advantage of trading using opposite Apple and InterRent Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, InterRent Real 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 InterRent Real will offset losses from the drop in InterRent Real's long position.

The idea behind Apple Inc CDR and InterRent Real Estate 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.