Correlation Between Mid Cap and Apple
Can any of the company-specific risk be diversified away by investing in both Mid Cap 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 Mid Cap and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Value and Apple Inc, you can compare the effects of market volatilities on Mid Cap 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 Mid Cap with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Apple.
Diversification Opportunities for Mid Cap and Apple
Pay attention - limited upside
The 3 months correlation between Mid and Apple is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Mid Cap 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 Mid Cap Value 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 Mid Cap i.e., Mid Cap and Apple go up and down completely randomly.
Pair Corralation between Mid Cap and Apple
Assuming the 90 days horizon Mid Cap Value is expected to generate 0.45 times more return on investment than Apple. However, Mid Cap Value is 2.2 times less risky than Apple. It trades about 0.04 of its potential returns per unit of risk. Apple Inc is currently generating about -0.13 per unit of risk. If you would invest 1,547 in Mid Cap Value on January 20, 2024 and sell it today you would earn a total of 15.00 from holding Mid Cap Value or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Mid Cap Value vs. Apple Inc
Performance |
| Timeline |
| Mid Cap Value |
| Apple Inc |
Mid Cap and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Apple
The main advantage of trading using opposite Mid Cap and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap 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.| Mid Cap vs. Equity Growth Fund | Mid Cap vs. Income Growth Fund | Mid Cap vs. Diversified Bond Fund | Mid Cap vs. Short Term Government Fund |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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