Correlation Between Apple and PATRICK INDUSTR

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

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

Diversification Opportunities for Apple and PATRICK INDUSTR

0.14

Correlation Coefficient

Apple  PATRICK INDUSTR

Average diversification

The 3 months correlation between Apple and PATRICK is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and PATRICK INDUSTR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PATRICK INDUSTR 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 PATRICK INDUSTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PATRICK INDUSTR has no effect on the direction of Apple i.e., Apple and PATRICK INDUSTR go up and down completely randomly.

Pair Corralation between Apple and PATRICK INDUSTR

Assuming the 90 days trading horizon Apple is expected to generate 1.19 times less return on investment than PATRICK INDUSTR. But when comparing it to its historical volatility, Apple Inc is 1.62 times less risky than PATRICK INDUSTR. It trades about 0.11 of its potential returns per unit of risk. PATRICK INDUSTR is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,587  in PATRICK INDUSTR on September 25, 2024 and sell it today you would earn a total of  4,313  from holding PATRICK INDUSTR or generate 120.24% return on investment over 90 days.

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

Apple Inc  vs.  PATRICK INDUSTR

Apple Inc

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Apple displayed solid returns over the last few months and may actually be approaching a breakup point.

PATRICK INDUSTR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PATRICK INDUSTR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PATRICK INDUSTR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apple and PATRICK INDUSTR

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

The idea behind Apple Inc and PATRICK INDUSTR 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.