Correlation Between Apple and ABERCROMBIE FTCH

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

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

Diversification Opportunities for Apple and ABERCROMBIE FTCH

0.72

Correlation Coefficient

Apple  ABERCROMBIE FTCH

Poor diversification

The 3 months correlation between Apple and ABERCROMBIE is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ABERCROMBIE FTCH A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABERCROMBIE FTCH A 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 ABERCROMBIE FTCH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABERCROMBIE FTCH A has no effect on the direction of Apple i.e., Apple and ABERCROMBIE FTCH go up and down completely randomly.

Pair Corralation between Apple and ABERCROMBIE FTCH

Assuming the 90 days trading horizon Apple is expected to generate 1.54 times less return on investment than ABERCROMBIE FTCH. But when comparing it to its historical volatility, Apple Inc is 1.99 times less risky than ABERCROMBIE FTCH. It trades about 0.19 of its potential returns per unit of risk. ABERCROMBIE FTCH A is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  11,414  in ABERCROMBIE FTCH A on March 14, 2024 and sell it today you would earn a total of  4,308  from holding ABERCROMBIE FTCH A or generate 37.74% 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.  ABERCROMBIE FTCH A

Apple Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

ABERCROMBIE FTCH A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ABERCROMBIE FTCH A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ABERCROMBIE FTCH unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and ABERCROMBIE FTCH

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

The idea behind Apple Inc and ABERCROMBIE FTCH A 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..