Correlation Between Apple and Hamilton Beach
Can any of the company-specific risk be diversified away by investing in both Apple and Hamilton Beach 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 Hamilton Beach into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Hamilton Beach Brands, you can compare the effects of market volatilities on Apple and Hamilton Beach 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 Hamilton Beach. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Hamilton Beach.
Diversification Opportunities for Apple and Hamilton Beach
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Apple and Hamilton is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Hamilton Beach Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Beach Brands 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 Hamilton Beach. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Beach Brands has no effect on the direction of Apple i.e., Apple and Hamilton Beach go up and down completely randomly.
Pair Corralation between Apple and Hamilton Beach
Given the investment horizon of 90 days Apple is expected to generate 44.33 times less return on investment than Hamilton Beach. But when comparing it to its historical volatility, Apple Inc is 2.62 times less risky than Hamilton Beach. It trades about 0.01 of its potential returns per unit of risk. Hamilton Beach Brands is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,267 in Hamilton Beach Brands on February 6, 2024 and sell it today you would earn a total of 1,130 from holding Hamilton Beach Brands or generate 89.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Hamilton Beach Brands
Performance |
| Timeline |
| Apple Inc |
| Hamilton Beach Brands |
Apple and Hamilton Beach Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Hamilton Beach
The main advantage of trading using opposite Apple and Hamilton Beach positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Hamilton Beach 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 Hamilton Beach will offset losses from the drop in Hamilton Beach's long position.The idea behind Apple Inc and Hamilton Beach Brands 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.| Hamilton Beach vs. Tempur Sealy International | Hamilton Beach vs. La Z Boy Incorporated | Hamilton Beach vs. MasterBrand | Hamilton Beach vs. Ethan Allen Interiors |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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