Correlation Between Applovin Corp and Income Stock

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

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

Diversification Opportunities for Applovin Corp and Income Stock

-0.1

Correlation Coefficient

Applovin Corp  Income Stock

Good diversification

The 3 months correlation between Applovin and Income is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Applovin Corp and Income Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Stock and Applovin Corp 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 Applovin Corp are associated (or correlated) with Income Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Stock has no effect on the direction of Applovin Corp i.e., Applovin Corp and Income Stock go up and down completely randomly.

Pair Corralation between Applovin Corp and Income Stock

Considering the 90-day investment horizon Applovin Corp is expected to generate 4.77 times more return on investment than Income Stock. However, Applovin Corp is 4.77 times more volatile than Income Stock Fund. It trades about 0.13 of its potential returns per unit of risk. Income Stock Fund is currently generating about 0.17 per unit of risk. If you would invest  27,949  in Applovin Corp on May 1, 2025 and sell it today you would earn a total of  8,214  from holding Applovin Corp or generate 29.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Applovin Corp  vs.  Income Stock Fund

Applovin Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Applovin Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Applovin Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Income Stock

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Income Stock Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Income Stock may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Applovin Corp and Income Stock

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

The idea behind Applovin Corp and Income Stock Fund 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.