Correlation Between MARKET VECTR and Apple

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

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

Diversification Opportunities for MARKET VECTR and Apple

0.86

Correlation Coefficient

MARKET VECTR  Apple

Very poor diversification

The 3 months correlation between MARKET and Apple is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding MARKET VECTR RETAIL and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and MARKET VECTR 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 MARKET VECTR RETAIL are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of MARKET VECTR i.e., MARKET VECTR and Apple go up and down completely randomly.

Pair Corralation between MARKET VECTR and Apple

Assuming the 90 days trading horizon MARKET VECTR RETAIL is expected to generate 0.69 times more return on investment than Apple. However, MARKET VECTR RETAIL is 1.45 times less risky than Apple. It trades about 0.32 of its potential returns per unit of risk. Apple Inc is currently generating about 0.17 per unit of risk. If you would invest  18,682  in MARKET VECTR RETAIL on September 4, 2024 and sell it today you would earn a total of  3,488  from holding MARKET VECTR RETAIL or generate 18.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	93.85%
Values	Daily Returns

MARKET VECTR RETAIL  vs.  Apple Inc

MARKET VECTR RETAIL

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MARKET VECTR RETAIL are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, MARKET VECTR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 13 (%) 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.

Pair Trading with MARKET VECTR and Apple

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

The idea behind MARKET VECTR RETAIL and Apple Inc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.