Correlation Between Apple and Xtrackers California
Can any of the company-specific risk be diversified away by investing in both Apple and Xtrackers California 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 Xtrackers California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Xtrackers California Municipal, you can compare the effects of market volatilities on Apple and Xtrackers California 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 Xtrackers California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Xtrackers California.
Diversification Opportunities for Apple and Xtrackers California
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Apple and Xtrackers is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Xtrackers California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers California 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 Xtrackers California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers California has no effect on the direction of Apple i.e., Apple and Xtrackers California go up and down completely randomly.
Pair Corralation between Apple and Xtrackers California
Given the investment horizon of 90 days Apple Inc is expected to generate 7.66 times more return on investment than Xtrackers California. However, Apple is 7.66 times more volatile than Xtrackers California Municipal. It trades about 0.02 of its potential returns per unit of risk. Xtrackers California Municipal is currently generating about -0.04 per unit of risk. If you would invest 15,618 in Apple Inc on January 20, 2024 and sell it today you would earn a total of 882.00 from holding Apple Inc or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 17.58% |
| Values | Daily Returns |
Apple Inc vs. Xtrackers California Municipal
Performance |
| Timeline |
| Apple Inc |
| Xtrackers California |
Apple and Xtrackers California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Xtrackers California
The main advantage of trading using opposite Apple and Xtrackers California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Xtrackers California 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 Xtrackers California will offset losses from the drop in Xtrackers California's long position.The idea behind Apple Inc and Xtrackers California Municipal 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.| Xtrackers California vs. Vanguard Total Stock | Xtrackers California vs. SPDR SP 500 | Xtrackers California vs. iShares Core SP | Xtrackers California vs. Vanguard Total Bond |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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