Correlation Between Apple and Acadia Realty

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

Diversification Opportunities for Apple and Acadia Realty

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Apple and Acadia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Acadia Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Realty Trust 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 Acadia Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Realty Trust has no effect on the direction of Apple i.e., Apple and Acadia Realty go up and down completely randomly.

Pair Corralation between Apple and Acadia Realty

Given the investment horizon of 90 days Apple is expected to generate 1.38 times less return on investment than Acadia Realty. In addition to that, Apple is 1.19 times more volatile than Acadia Realty Trust. It trades about 0.05 of its total potential returns per unit of risk. Acadia Realty Trust is currently generating about 0.08 per unit of volatility. If you would invest  1,433  in Acadia Realty Trust on September 8, 2022 and sell it today you would earn a total of  51.00  from holding Acadia Realty Trust or generate 3.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  Acadia Realty Trust

 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 uncertain 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

Acadia Realty Trust 
Acadia Performance
0 of 100
Over the last 90 days Acadia Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward-looking signals remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Acadia Price Channel

Apple and Acadia Realty Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and Acadia Realty

The main advantage of trading using opposite Apple and Acadia Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Acadia Realty 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 Acadia Realty will offset losses from the drop in Acadia Realty's long position.
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The idea behind Apple Inc and Acadia Realty Trust 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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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