Correlation Between Apple and WINDSTREAM HLDGS

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

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

Diversification Opportunities for Apple and WINDSTREAM HLDGS

-0.61

Correlation Coefficient

Apple  WINDSTREAM HLDGS

Excellent diversification

The 3 months correlation between Apple and WINDSTREAM is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and WINDSTREAM HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WINDSTREAM HLDGS 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 WINDSTREAM HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WINDSTREAM HLDGS has no effect on the direction of Apple i.e., Apple and WINDSTREAM HLDGS go up and down completely randomly.

Pair Corralation between Apple and WINDSTREAM HLDGS

Assuming the 90 days trading horizon Apple is expected to generate 32.08 times less return on investment than WINDSTREAM HLDGS. But when comparing it to its historical volatility, Apple Inc is 36.34 times less risky than WINDSTREAM HLDGS. It trades about 0.1 of its potential returns per unit of risk. WINDSTREAM HLDGS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3.18  in WINDSTREAM HLDGS on September 16, 2024 and sell it today you would lose (3.13) from holding WINDSTREAM HLDGS or give up 98.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	77.27%
Values	Daily Returns

Apple Inc  vs.  WINDSTREAM HLDGS

Apple Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

WINDSTREAM HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WINDSTREAM HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Apple and WINDSTREAM HLDGS

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

The idea behind Apple Inc and WINDSTREAM HLDGS 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.