Correlation Between Apple and LODESTAR MIN

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

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

Diversification Opportunities for Apple and LODESTAR MIN

0.87

Correlation Coefficient

Apple  LODESTAR MIN

Very poor diversification

The 3 months correlation between Apple and LODESTAR is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and LODESTAR MIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LODESTAR MIN 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 LODESTAR MIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LODESTAR MIN has no effect on the direction of Apple i.e., Apple and LODESTAR MIN go up and down completely randomly.

Pair Corralation between Apple and LODESTAR MIN

Assuming the 90 days trading horizon Apple is expected to generate 95.46 times less return on investment than LODESTAR MIN. But when comparing it to its historical volatility, Apple Inc is 132.26 times less risky than LODESTAR MIN. It trades about 0.21 of its potential returns per unit of risk. LODESTAR MIN is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.44  in LODESTAR MIN on September 23, 2024 and sell it today you would earn a total of  8.33  from holding LODESTAR MIN or generate 1893.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.73%
Values	Daily Returns

Apple Inc  vs.  LODESTAR MIN

Apple Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

LODESTAR MIN

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LODESTAR MIN are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking indicators, LODESTAR MIN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and LODESTAR MIN

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

The idea behind Apple Inc and LODESTAR MIN 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.