Correlation Between Apple and Aaon

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Can any of the company-specific risk be diversified away by investing in both Apple and Aaon 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 Aaon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Aaon Inc, you can compare the effects of market volatilities on Apple and Aaon 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 Aaon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Aaon.

Diversification Opportunities for Apple and Aaon

-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between Apple and Aaon is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Aaon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aaon 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 Aaon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aaon Inc has no effect on the direction of Apple i.e., Apple and Aaon go up and down completely randomly.

Pair Corralation between Apple and Aaon

Given the investment horizon of 90 days Apple is expected to generate 1.06 times less return on investment than Aaon. But when comparing it to its historical volatility, Apple Inc is 1.06 times less risky than Aaon. It trades about 0.03 of its potential returns per unit of risk. Aaon Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6,263  in Aaon Inc on August 31, 2022 and sell it today you would earn a total of  1,285  from holding Aaon Inc or generate 20.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  Aaon Inc

 Performance (%) 
       Timeline  
Apple Inc 
Apple Performance
0 of 100
Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Apple Price Channel

Aaon Inc 
Aaon Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aaon Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Aaon disclosed solid returns over the last few months and may actually be approaching a breakup point.

Aaon Price Channel

Apple and Aaon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and Aaon

The main advantage of trading using opposite Apple and Aaon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Aaon 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 Aaon will offset losses from the drop in Aaon's long position.
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The idea behind Apple Inc and Aaon 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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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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