Correlation Between Apple and CDL INVESTMENT

Can any of the company-specific risk be diversified away by investing in both Apple and CDL INVESTMENT 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 Apple and CDL INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and CDL INVESTMENT, you can compare the effects of market volatilities on Apple and CDL INVESTMENT 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 Apple with a short position of CDL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and CDL INVESTMENT.

Diversification Opportunities for Apple and CDL INVESTMENT

-0.06

Correlation Coefficient

Apple  CDL INVESTMENT

Good diversification

The 3 months correlation between Apple and CDL is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and CDL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDL INVESTMENT and Apple 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 Apple Inc are associated (or correlated) with CDL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDL INVESTMENT has no effect on the direction of Apple i.e., Apple and CDL INVESTMENT go up and down completely randomly.

Pair Corralation between Apple and CDL INVESTMENT

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.66 times more return on investment than CDL INVESTMENT. However, Apple Inc is 1.52 times less risky than CDL INVESTMENT. It trades about 0.04 of its potential returns per unit of risk. CDL INVESTMENT is currently generating about 0.02 per unit of risk. If you would invest  15,491  in Apple Inc on June 11, 2024 and sell it today you would earn a total of  4,461  from holding Apple Inc or generate 28.8% return on investment over 90 days.

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

Apple Inc  vs.  CDL INVESTMENT

Apple Inc

Risk-Adjusted Performance

3 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Apple is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CDL INVESTMENT

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CDL INVESTMENT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, CDL INVESTMENT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Apple and CDL INVESTMENT

The main advantage of trading using opposite Apple and CDL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, CDL INVESTMENT 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 CDL INVESTMENT will offset losses from the drop in CDL INVESTMENT's long position.

The idea behind Apple Inc and CDL INVESTMENT 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.