Correlation Between Apple and Nexera Energy

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

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

Diversification Opportunities for Apple and Nexera Energy

0.74

Correlation Coefficient

Apple  Nexera Energy

Poor diversification

The 3 months correlation between Apple and Nexera is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Nexera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexera Energy 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 Nexera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexera Energy has no effect on the direction of Apple i.e., Apple and Nexera Energy go up and down completely randomly.

Pair Corralation between Apple and Nexera Energy

Given the investment horizon of 90 days Apple Inc is expected to generate 0.11 times more return on investment than Nexera Energy. However, Apple Inc is 8.93 times less risky than Nexera Energy. It trades about 0.01 of its potential returns per unit of risk. Nexera Energy is currently generating about -0.02 per unit of risk. If you would invest  16,290  in Apple Inc on January 20, 2024 and sell it today you would earn a total of  414.00  from holding Apple Inc or generate 2.54% return on investment over 90 days.

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

Apple Inc  vs.  Nexera Energy

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.

Nexera Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexera Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Apple and Nexera Energy

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

The idea behind Apple Inc and Nexera Energy 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.