Correlation Between Apple and PHENIXFIN

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

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

Diversification Opportunities for Apple and PHENIXFIN

0.78

Correlation Coefficient

Apple  PHENIXFIN

Poor diversification

The 3 months correlation between Apple and PHENIXFIN is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and PHENIXFIN P DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHENIXFIN P DL 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 PHENIXFIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHENIXFIN P DL has no effect on the direction of Apple i.e., Apple and PHENIXFIN go up and down completely randomly.

Pair Corralation between Apple and PHENIXFIN

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.87 times more return on investment than PHENIXFIN. However, Apple Inc is 1.14 times less risky than PHENIXFIN. It trades about 0.22 of its potential returns per unit of risk. PHENIXFIN P DL is currently generating about 0.16 per unit of risk. If you would invest  20,820  in Apple Inc on September 28, 2024 and sell it today you would earn a total of  3,680  from holding Apple Inc or generate 17.68% return on investment over 90 days.

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

Apple Inc  vs.  PHENIXFIN P DL

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 comparatively uncertain fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

PHENIXFIN P DL

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PHENIXFIN P DL are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, PHENIXFIN reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and PHENIXFIN

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

The idea behind Apple Inc and PHENIXFIN P DL 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.