Correlation Between WGHT WTCHER and Apple

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

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

Diversification Opportunities for WGHT WTCHER and Apple

0.67

Correlation Coefficient

WGHT WTCHER  Apple

Poor diversification

The 3 months correlation between WGHT and Apple is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding WGHT WTCHER INTL and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and WGHT WTCHER 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 WGHT WTCHER INTL 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 WGHT WTCHER i.e., WGHT WTCHER and Apple go up and down completely randomly.

Pair Corralation between WGHT WTCHER and Apple

Assuming the 90 days trading horizon WGHT WTCHER INTL is expected to generate 12.53 times more return on investment than Apple. However, WGHT WTCHER is 12.53 times more volatile than Apple Inc. It trades about 0.12 of its potential returns per unit of risk. Apple Inc is currently generating about 0.25 per unit of risk. If you would invest  73.00  in WGHT WTCHER INTL on September 23, 2024 and sell it today you would earn a total of  64.00  from holding WGHT WTCHER INTL or generate 87.67% return on investment over 90 days.

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

WGHT WTCHER INTL  vs.  Apple Inc

WGHT WTCHER INTL

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WGHT WTCHER INTL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WGHT WTCHER unveiled solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WGHT WTCHER and Apple

The main advantage of trading using opposite WGHT WTCHER and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WGHT WTCHER 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 WGHT WTCHER INTL 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.