Correlation Between Vertex Energy and Apple

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

Diversification Opportunities for Vertex Energy and Apple

-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between Vertex and Apple is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vertex Energy and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Vertex Energy 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 Vertex Energy are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Vertex Energy i.e., Vertex Energy and Apple go up and down completely randomly.

Pair Corralation between Vertex Energy and Apple

Given the investment horizon of 90 days Vertex Energy is expected to generate 5.9 times more return on investment than Apple. However, Vertex Energy is 5.9 times more volatile than Apple Inc. It trades about 0.11 of its potential returns per unit of risk. Apple Inc is currently generating about 0.04 per unit of risk. If you would invest  125.00  in Vertex Energy on May 10, 2022 and sell it today you would earn a total of  1,273  from holding Vertex Energy or generate 1018.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Vertex Energy  vs.  Apple Inc

 Performance (%) 
       Timeline  
Vertex Energy 
Vertex Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Vertex Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Vertex Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Vertex Price Channel

Apple Inc 
Apple Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Apple Price Channel

Vertex Energy and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vertex Energy and Apple

The main advantage of trading using opposite Vertex Energy and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vertex Energy position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.

Vertex Energy

Pair trading matchups for Vertex Energy

The idea behind Vertex Energy and Apple 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.
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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