Correlation Between Apple and GLATFELTER

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

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

Diversification Opportunities for Apple and GLATFELTER

-0.65

Correlation Coefficient

Apple  GLATFELTER

Excellent diversification

The 3 months correlation between Apple and GLATFELTER is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and GLATFELTER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLATFELTER 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 GLATFELTER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLATFELTER has no effect on the direction of Apple i.e., Apple and GLATFELTER go up and down completely randomly.

Pair Corralation between Apple and GLATFELTER

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.36 times more return on investment than GLATFELTER. However, Apple Inc is 2.8 times less risky than GLATFELTER. It trades about 0.26 of its potential returns per unit of risk. GLATFELTER is currently generating about -0.08 per unit of risk. If you would invest  20,261  in Apple Inc on October 1, 2024 and sell it today you would earn a total of  4,364  from holding Apple Inc or generate 21.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Apple Inc  vs.  GLATFELTER

Apple Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

GLATFELTER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GLATFELTER 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 rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Apple and GLATFELTER

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

The idea behind Apple Inc and GLATFELTER 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.