Correlation Between Apple and Strategic Allocation

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

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

Diversification Opportunities for Apple and Strategic Allocation

-0.78

Correlation Coefficient

Apple  Strategic Allocation

Pay attention - limited upside

The 3 months correlation between Apple and Strategic is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Strategic Allocation Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Allocation 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 Strategic Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Allocation has no effect on the direction of Apple i.e., Apple and Strategic Allocation go up and down completely randomly.

Pair Corralation between Apple and Strategic Allocation

Given the investment horizon of 90 days Apple Inc is expected to under-perform the Strategic Allocation. In addition to that, Apple is 3.8 times more volatile than Strategic Allocation Moderate. It trades about -0.19 of its total potential returns per unit of risk. Strategic Allocation Moderate is currently generating about -0.35 per unit of volatility. If you would invest  628.00  in Strategic Allocation Moderate on January 20, 2024 and sell it today you would lose (21.00) from holding Strategic Allocation Moderate or give up 3.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Apple Inc  vs.  Strategic Allocation Moderate

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Strategic Allocation

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Allocation Moderate are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Strategic Allocation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Apple and Strategic Allocation

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

The idea behind Apple Inc and Strategic Allocation Moderate 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.