Correlation Between Apple and Monitronics International

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

Diversification Opportunities for Apple and Monitronics International

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Apple and Monitronics is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Monitronics International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monitronics International 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 Monitronics International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monitronics International has no effect on the direction of Apple i.e., Apple and Monitronics International go up and down completely randomly.

Pair Corralation between Apple and Monitronics International

Given the investment horizon of 90 days Apple Inc is expected to generate 1.49 times more return on investment than Monitronics International. However, Apple is 1.49 times more volatile than Monitronics International. It trades about 0.05 of its potential returns per unit of risk. Monitronics International is currently generating about 0.01 per unit of risk. If you would invest  14,221  in Apple Inc on September 2, 2022 and sell it today you would earn a total of  610.00  from holding Apple Inc or generate 4.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy97.67%
ValuesDaily Returns

Apple Inc  vs.  Monitronics International

 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 new stock price chaos, may contribute to medium-term losses for the stakeholders.

Apple Price Channel

Monitronics International 
Monitronics Performance
0 of 100
Over the last 90 days Monitronics International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long term up-swing for the company investors.

Monitronics Price Channel

Apple and Monitronics International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and Monitronics International

The main advantage of trading using opposite Apple and Monitronics International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Monitronics International 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 Monitronics International will offset losses from the drop in Monitronics International's long position.
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The idea behind Apple Inc and Monitronics International 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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