Correlation Between Apple and Civitas Resources

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

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

Diversification Opportunities for Apple and Civitas Resources

0.22

Correlation Coefficient

Apple  Civitas Resources

Modest diversification

The 3 months correlation between Apple and Civitas is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Civitas Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civitas Resources 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 Civitas Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civitas Resources has no effect on the direction of Apple i.e., Apple and Civitas Resources go up and down completely randomly.

Pair Corralation between Apple and Civitas Resources

Given the investment horizon of 90 days Apple is expected to generate 77.4 times less return on investment than Civitas Resources. But when comparing it to its historical volatility, Apple Inc is 57.21 times less risky than Civitas Resources. It trades about 0.09 of its potential returns per unit of risk. Civitas Resources is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3.40  in Civitas Resources on September 3, 2024 and sell it today you would earn a total of  13.60  from holding Civitas Resources or generate 400.0% return on investment over 90 days.

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

Apple Inc  vs.  Civitas Resources

Apple Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 7 (%) 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.

Civitas Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Civitas Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Civitas Resources demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Civitas Resources

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

The idea behind Apple Inc and Civitas Resources 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.