Correlation Between Apple and IRobot

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

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Can any of the company-specific risk be diversified away by investing in both Apple and IRobot at the same time? Although using correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combing Apple and IRobot into the same portfolio which is an essential part of fundamental portfolio management process.

Diversification Opportunities for Apple and IRobot

0.89
Correlation
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<div class='circular--portrait-small' style='font-weight: 700;background:#754DEB;color: #F0FFF0;font-size:0.9em;padding-top: 12px;;'>IRB</div>

Very poor diversification

The 3 months correlation between Apple and IRobot is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and IRobot Corp. in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on IRobot 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 IRobot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRobot has no effect on the direction of Apple i.e. Apple and IRobot go up and down completely randomly.

Pair Corralation between Apple and IRobot

Given the investment horizon of 30 days, Apple is expected to generate 3.8 times less return on investment than IRobot. But when comparing it to its historical volatility, Apple Inc is 1.29 times less risky than IRobot. It trades about 0.07 of its potential returns per unit of risk. IRobot is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4,677  in IRobot on May 5, 2020 and sell it today you would earn a total of  3,432  from holding IRobot or generate 73.38% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  IRobot Corp.

 Performance (%) 
      Timeline 
Apple Inc 
44

Apple Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 30 days. Even with considerably weak technical indicators, Apple revealed solid returns over the last few months and may actually be approaching a breakup point.
IRobot 
1313

IRobot Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in IRobot are ranked lower than 13 (%) of all global equities and portfolios over the last 30 days. In spite of comparatively weak essential indicators, IRobot unveiled solid returns over the last few months and may actually be approaching a breakup point.

Apple and IRobot Volatility Contrast

 Predicted Return Density 
      Returns 
Check out your portfolio center. Please also try Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.


 
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