Correlation Between Cleveland Cliffs and Apple
Can any of the company-specific risk be diversified away by investing in both Cleveland Cliffs 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 Cleveland Cliffs and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cleveland Cliffs and Apple Inc, you can compare the effects of market volatilities on Cleveland Cliffs 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 Cleveland Cliffs with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleveland Cliffs and Apple.
Diversification Opportunities for Cleveland Cliffs and Apple
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cleveland and Apple is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cleveland Cliffs and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Cleveland Cliffs 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 Cleveland Cliffs 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 Cleveland Cliffs i.e., Cleveland Cliffs and Apple go up and down completely randomly.
Pair Corralation between Cleveland Cliffs and Apple
Considering the 90-day investment horizon Cleveland Cliffs is expected to generate 1.91 times more return on investment than Apple. However, Cleveland Cliffs is 1.91 times more volatile than Apple Inc. It trades about 0.06 of its potential returns per unit of risk. Apple Inc is currently generating about -0.04 per unit of risk. If you would invest 1,639 in Cleveland Cliffs on January 24, 2024 and sell it today you would earn a total of 446.00 from holding Cleveland Cliffs or generate 27.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Cleveland Cliffs vs. Apple Inc
Performance |
Timeline |
Cleveland Cliffs |
Apple Inc |
Cleveland Cliffs and Apple Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cleveland Cliffs and Apple
The main advantage of trading using opposite Cleveland Cliffs and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleveland Cliffs 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 Cleveland Cliffs 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.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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