Correlation Between Apple and Slate Grocery

Can any of the company-specific risk be diversified away by investing in both Apple and Slate Grocery 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 Slate Grocery 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 Slate Grocery REIT, you can compare the effects of market volatilities on Apple and Slate Grocery 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 Slate Grocery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Slate Grocery.

Diversification Opportunities for Apple and Slate Grocery

0.5

Correlation Coefficient

Apple  Slate Grocery

Very weak diversification

The 3 months correlation between Apple and Slate is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Slate Grocery REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slate Grocery REIT 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 Slate Grocery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slate Grocery REIT has no effect on the direction of Apple i.e., Apple and Slate Grocery go up and down completely randomly.

Pair Corralation between Apple and Slate Grocery

Assuming the 90 days trading horizon Apple is expected to generate 2.88 times less return on investment than Slate Grocery. In addition to that, Apple is 1.12 times more volatile than Slate Grocery REIT. It trades about 0.08 of its total potential returns per unit of risk. Slate Grocery REIT is currently generating about 0.26 per unit of volatility. If you would invest  1,254  in Slate Grocery REIT on September 3, 2024 and sell it today you would earn a total of  242.00  from holding Slate Grocery REIT or generate 19.3% return on investment over 90 days.

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

Apple Inc CDR  vs.  Slate Grocery REIT

Apple Inc CDR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Apple is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Slate Grocery REIT

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Slate Grocery REIT are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Slate Grocery sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Slate Grocery

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

The idea behind Apple Inc CDR and Slate Grocery REIT 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 Global Correlations module to find global opportunities by holding instruments from different markets.