Correlation Between AvalonBay Communities and Apple
Can any of the company-specific risk be diversified away by investing in both AvalonBay Communities 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 AvalonBay Communities and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AvalonBay Communities and Apple Inc, you can compare the effects of market volatilities on AvalonBay Communities 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 AvalonBay Communities with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of AvalonBay Communities and Apple.
Diversification Opportunities for AvalonBay Communities and Apple
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AvalonBay and Apple is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding AvalonBay Communities and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and AvalonBay Communities 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 AvalonBay Communities 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 AvalonBay Communities i.e., AvalonBay Communities and Apple go up and down completely randomly.
Pair Corralation between AvalonBay Communities and Apple
Considering the 90-day investment horizon AvalonBay Communities is expected to generate 0.95 times more return on investment than Apple. However, AvalonBay Communities is 1.06 times less risky than Apple. It trades about 0.21 of its potential returns per unit of risk. Apple Inc is currently generating about -0.03 per unit of risk. If you would invest 18,030 in AvalonBay Communities on January 25, 2024 and sell it today you would earn a total of 1,107 from holding AvalonBay Communities or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AvalonBay Communities vs. Apple Inc
Performance |
| Timeline |
| AvalonBay Communities |
| Apple Inc |
AvalonBay Communities and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AvalonBay Communities and Apple
The main advantage of trading using opposite AvalonBay Communities and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AvalonBay Communities 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.| AvalonBay Communities vs. Essex Property Trust | AvalonBay Communities vs. UDR Inc | AvalonBay Communities vs. Mid America Apartment Communities | AvalonBay Communities vs. Camden Property Trust |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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