Correlation Between Apple and MedPeerInc

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

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

Diversification Opportunities for Apple and MedPeerInc

-0.49

Correlation Coefficient

Apple  MedPeerInc

Very good diversification

The 3 months correlation between Apple and MedPeerInc is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and MedPeerInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedPeerInc 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 MedPeerInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedPeerInc has no effect on the direction of Apple i.e., Apple and MedPeerInc go up and down completely randomly.

Pair Corralation between Apple and MedPeerInc

Given the investment horizon of 90 days Apple Inc is expected to generate 0.37 times more return on investment than MedPeerInc. However, Apple Inc is 2.72 times less risky than MedPeerInc. It trades about 0.17 of its potential returns per unit of risk. MedPeerInc is currently generating about -0.15 per unit of risk. If you would invest  22,712  in Apple Inc on September 24, 2024 and sell it today you would earn a total of  2,815  from holding Apple Inc or generate 12.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Apple Inc  vs.  MedPeerInc

Apple Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 13 (%) 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.

MedPeerInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MedPeerInc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Apple and MedPeerInc

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

The idea behind Apple Inc and MedPeerInc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.