Correlation Between ARISTOCRAT LEISURE and Apple

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

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

Diversification Opportunities for ARISTOCRAT LEISURE and Apple

0.82

Correlation Coefficient

ARISTOCRAT LEISURE  Apple

Very poor diversification

The 3 months correlation between ARISTOCRAT and Apple is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and Apple go up and down completely randomly.

Pair Corralation between ARISTOCRAT LEISURE and Apple

Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 0.86 times more return on investment than Apple. However, ARISTOCRAT LEISURE is 1.16 times less risky than Apple. It trades about 0.32 of its potential returns per unit of risk. Apple Inc is currently generating about 0.2 per unit of risk. If you would invest  3,286  in ARISTOCRAT LEISURE on September 13, 2024 and sell it today you would earn a total of  794.00  from holding ARISTOCRAT LEISURE or generate 24.16% return on investment over 90 days.

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

ARISTOCRAT LEISURE  vs.  Apple Inc

ARISTOCRAT LEISURE

Risk-Adjusted Performance

24 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ARISTOCRAT LEISURE are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ARISTOCRAT LEISURE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ARISTOCRAT LEISURE and Apple

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

The idea behind ARISTOCRAT LEISURE and Apple Inc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.