Correlation Between Archer Daniels and Apple

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Can any of the company-specific risk be diversified away by investing in both Archer Daniels 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 Archer Daniels and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archer Daniels Midland and Apple Inc, you can compare the effects of market volatilities on Archer Daniels 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 Archer Daniels with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Daniels and Apple.

Diversification Opportunities for Archer Daniels and Apple

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Archer and Apple is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Archer-Daniels-Midland and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Archer Daniels 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 Archer Daniels Midland 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 Archer Daniels i.e., Archer Daniels and Apple go up and down completely randomly.

Pair Corralation between Archer Daniels and Apple

Considering the 90-day investment horizon Archer Daniels Midland is expected to generate 0.87 times more return on investment than Apple. However, Archer Daniels Midland is 1.16 times less risky than Apple. It trades about 0.6 of its potential returns per unit of risk. Apple Inc is currently generating about -0.16 per unit of risk. If you would invest  5,301  in Archer Daniels Midland on December 30, 2023 and sell it today you would earn a total of  980.00  from holding Archer Daniels Midland or generate 18.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Archer-Daniels-Midland  vs.  Apple Inc

 Performance 
       Timeline  
Archer-Daniels-Midland 

Risk-Adjusted Performance

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Over the last 90 days Archer Daniels Midland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
Apple Inc 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Archer Daniels and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Archer Daniels and Apple

The main advantage of trading using opposite Archer Daniels and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Daniels 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 Archer Daniels Midland 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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