Correlation Between Apple and Aspen Digital

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

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

Diversification Opportunities for Apple and Aspen Digital

0.68

Correlation Coefficient

Apple  Aspen Digital

Poor diversification

The 3 months correlation between Apple and Aspen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Aspen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Digital 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 Aspen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Digital has no effect on the direction of Apple i.e., Apple and Aspen Digital go up and down completely randomly.

Pair Corralation between Apple and Aspen Digital

Given the investment horizon of 90 days Apple Inc is expected to generate 3.49 times more return on investment than Aspen Digital. However, Apple is 3.49 times more volatile than Aspen Digital. It trades about 0.12 of its potential returns per unit of risk. Aspen Digital is currently generating about 0.07 per unit of risk. If you would invest  22,214  in Apple Inc on September 5, 2024 and sell it today you would earn a total of  2,051  from holding Apple Inc or generate 9.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Apple Inc  vs.  Aspen Digital

Apple Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aspen Digital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Digital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Aspen Digital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Apple and Aspen Digital

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

The idea behind Apple Inc and Aspen Digital 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.