Correlation Between Apple and Enterprise Products

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

Diversification Opportunities for Apple and Enterprise Products

-0.36
  Correlation Coefficient

Very good diversification

The 12 months correlation between Apple and Enterprise is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Enterprise Products Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Products 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 Enterprise Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Products has no effect on the direction of Apple i.e., Apple and Enterprise Products go up and down completely randomly.

Pair Corralation between Apple and Enterprise Products

Given the investment horizon of 90 days Apple Inc is expected to under-perform the Enterprise Products. In addition to that, Apple is 1.87 times more volatile than Enterprise Products Partners. It trades about -0.02 of its total potential returns per unit of risk. Enterprise Products Partners is currently generating about -0.03 per unit of volatility. If you would invest  2,584  in Enterprise Products Partners on September 1, 2022 and sell it today you would lose (103.00)  from holding Enterprise Products Partners or give up 3.99% of portfolio value over 90 days.
Time Period12 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  Enterprise Products Partners

 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 relatively steady basic indicators, Apple is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Apple Price Channel

Enterprise Products 
Enterprise Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Enterprise Products Partners are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Enterprise Products may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Enterprise Price Channel

Apple and Enterprise Products Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and Enterprise Products

The main advantage of trading using opposite Apple and Enterprise Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Enterprise Products 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 Enterprise Products will offset losses from the drop in Enterprise Products' long position.
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The idea behind Apple Inc and Enterprise Products Partners 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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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