Correlation Between Archer Daniels and Apple

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

-0.68

Correlation Coefficient

Archer Daniels  Apple

Excellent diversification

The 3 months correlation between Archer and Apple is -0.68. 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 0.92 times more return on investment than Apple. However, Archer Daniels Midland is 1.09 times less risky than Apple. It trades about 0.23 of its potential returns per unit of risk. Apple Inc is currently generating about -0.11 per unit of risk. If you would invest  5,301  in Archer Daniels Midland on January 29, 2024 and sell it today you would earn a total of  709.00  from holding Archer Daniels Midland or generate 13.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Archer Daniels Midland  vs.  Apple Inc

Archer Daniels Midland

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Daniels Midland are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Archer Daniels may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Apple Inc

Risk-Adjusted Performance

0 of 100

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 conflicting 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.

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 Stocks Directory module to find actively traded stocks across global markets.