Correlation Between Apple and EI Du

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

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

Diversification Opportunities for Apple and EI Du

-0.56

Correlation Coefficient

Apple  EI Du

Excellent diversification

The 3 months correlation between Apple and CTA-P-A is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and EI du Pont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EI du Pont 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 EI Du. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EI du Pont has no effect on the direction of Apple i.e., Apple and EI Du go up and down completely randomly.

Pair Corralation between Apple and EI Du

Given the investment horizon of 90 days Apple Inc is expected to generate 0.52 times more return on investment than EI Du. However, Apple Inc is 1.93 times less risky than EI Du. It trades about 0.14 of its potential returns per unit of risk. EI du Pont is currently generating about -0.17 per unit of risk. If you would invest  23,274  in Apple Inc on September 29, 2024 and sell it today you would earn a total of  2,285  from holding Apple Inc or generate 9.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	66.67%
Values	Daily Returns

Apple Inc  vs.  EI du Pont

Apple Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

EI du Pont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EI du Pont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Apple and EI Du

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

The idea behind Apple Inc and EI du Pont 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.