Correlation Between Apple and Bain Capital

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

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

Diversification Opportunities for Apple and Bain Capital

-0.45

Correlation Coefficient

Apple  Bain Capital

Very good diversification

The 3 months correlation between Apple and Bain is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Bain Capital Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bain Capital Specialty 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 Bain Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bain Capital Specialty has no effect on the direction of Apple i.e., Apple and Bain Capital go up and down completely randomly.

Pair Corralation between Apple and Bain Capital

Assuming the 90 days trading horizon Apple is expected to generate 1.08 times less return on investment than Bain Capital. In addition to that, Apple is 1.78 times more volatile than Bain Capital Specialty. It trades about 0.22 of its total potential returns per unit of risk. Bain Capital Specialty is currently generating about 0.41 per unit of volatility. If you would invest  1,416  in Bain Capital Specialty on February 5, 2024 and sell it today you would earn a total of  158.00  from holding Bain Capital Specialty or generate 11.16% return on investment over 90 days.

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

Apple Inc  vs.  Bain Capital Specialty

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. In spite of rather sound fundamental indicators, Apple is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bain Capital Specialty

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bain Capital Specialty are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Bain Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Bain Capital

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

The idea behind Apple Inc and Bain Capital Specialty 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.