Correlation Between Apple and Irobot Corp

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

Diversification Opportunities for Apple and Irobot Corp

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Apple and Irobot is 0.48. 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 Corp 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 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Irobot Corp has no effect on the direction of Apple i.e., Apple and Irobot Corp go up and down completely randomly.

Pair Corralation between Apple and Irobot Corp

Given the investment horizon of 90 days Apple is expected to generate 23.75 times less return on investment than Irobot Corp. But when comparing it to its historical volatility, Apple Inc is 1.66 times less risky than Irobot Corp. It trades about 0.01 of its potential returns per unit of risk. Irobot Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,872  in Irobot Corp on July 9, 2022 and sell it today you would earn a total of  1,750  from holding Irobot Corp or generate 45.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  Irobot Corp

 Performance (%) 
       Timeline  
Apple Inc 
Apple Performance
1 of 100
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. Even with relatively steady basic indicators, Apple is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Apple Price Channel

Irobot Corp 
Irobot Performance
15 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Irobot Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental drivers, Irobot Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Irobot Price Channel

Apple and Irobot Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and Irobot Corp

The main advantage of trading using opposite Apple and Irobot Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Irobot Corp 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 Irobot Corp will offset losses from the drop in Irobot Corp's long position.
Apple vs. Amazon Inc
The idea behind Apple Inc and Irobot Corp 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.
Irobot Corp vs. Amazon Inc
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 CEO Directory module to screen CEOs from public companies around the world.

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