Correlation Between Yahoo and Apple

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

Diversification Opportunities for Yahoo and Apple

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Yahoo and Apple is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Yahoo Inc and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Yahoo 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 Yahoo Inc 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 Yahoo i.e., Yahoo and Apple go up and down completely randomly.

Pair Corralation between Yahoo and Apple

If you would invest (100.00) in Yahoo Inc on December 30, 2023 and sell it today you would earn a total of  100.00  from holding Yahoo Inc or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Yahoo Inc  vs.  Apple Inc

 Performance 
       Timeline  
Yahoo Inc 

Risk-Adjusted Performance

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Over the last 90 days Yahoo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Yahoo is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Apple Inc 

Risk-Adjusted Performance

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Low
 
High
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.

Yahoo and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Yahoo and Apple

The main advantage of trading using opposite Yahoo and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yahoo 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 Yahoo Inc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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