Correlation Between Apple and EBay

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

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

Diversification Opportunities for Apple and EBay

-0.39

Correlation Coefficient

Apple  EBay

Very good diversification

The 3 months correlation between Apple and EBay is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc 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 EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Apple i.e., Apple and EBay go up and down completely randomly.

Pair Corralation between Apple and EBay

Assuming the 90 days trading horizon Apple is expected to generate 12.47 times less return on investment than EBay. But when comparing it to its historical volatility, Apple Inc is 1.01 times less risky than EBay. It trades about 0.02 of its potential returns per unit of risk. eBay Inc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  18,921  in eBay Inc on April 24, 2025 and sell it today you would earn a total of  3,783  from holding eBay Inc or generate 19.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Apple Inc  vs.  eBay Inc

Apple Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Apple is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

eBay Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in eBay Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EBay sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and EBay

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

The idea behind Apple Inc and eBay 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.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.