Correlation Between Apple and Scientific Games

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

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

Diversification Opportunities for Apple and Scientific Games

-0.32

Correlation Coefficient

Apple  Scientific Games

Very good diversification

The 3 months correlation between Apple and Scientific is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Scientific Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Games 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 Scientific Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Games has no effect on the direction of Apple i.e., Apple and Scientific Games go up and down completely randomly.

Pair Corralation between Apple and Scientific Games

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.49 times more return on investment than Scientific Games. However, Apple Inc is 2.06 times less risky than Scientific Games. It trades about 0.1 of its potential returns per unit of risk. Scientific Games is currently generating about -0.03 per unit of risk. If you would invest  20,645  in Apple Inc on August 31, 2024 and sell it today you would earn a total of  1,750  from holding Apple Inc or generate 8.48% return on investment over 90 days.

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

Apple Inc  vs.  Scientific Games

Apple Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Scientific Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scientific Games has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Scientific Games is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Apple and Scientific Games

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

The idea behind Apple Inc and Scientific Games 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.