Correlation Between Godaddy and Apple

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

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

Diversification Opportunities for Godaddy and Apple

-0.71

Correlation Coefficient

Godaddy  Apple

Pay attention - limited upside

The 3 months correlation between Godaddy and Apple is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Godaddy and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Godaddy 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 Godaddy 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 Godaddy i.e., Godaddy and Apple go up and down completely randomly.

Pair Corralation between Godaddy and Apple

Given the investment horizon of 90 days Godaddy is expected to generate 1.03 times more return on investment than Apple. However, Godaddy is 1.03 times more volatile than Apple Inc. It trades about 0.07 of its potential returns per unit of risk. Apple Inc is currently generating about 0.04 per unit of risk. If you would invest  7,160  in Godaddy on February 5, 2024 and sell it today you would earn a total of  5,204  from holding Godaddy or generate 72.68% return on investment over 90 days.

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

Godaddy  vs.  Apple Inc

Godaddy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Godaddy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Godaddy may actually be approaching a critical reversion point that can send shares even higher in June 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 quite persistent basic indicators, Apple is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Godaddy and Apple

The main advantage of trading using opposite Godaddy and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Godaddy 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 Godaddy 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.