Correlation Between Apple and Best Buy
Can any of the company-specific risk be diversified away by investing in both Apple and Best Buy 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 Best Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Best Buy Co, you can compare the effects of market volatilities on Apple and Best Buy 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 Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Best Buy.
Diversification Opportunities for Apple and Best Buy
Poor diversification
The 3 months correlation between Apple and Best is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy 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 Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Apple i.e., Apple and Best Buy go up and down completely randomly.
Pair Corralation between Apple and Best Buy
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Best Buy. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 1.19 times less risky than Best Buy. The stock trades about -0.04 of its potential returns per unit of risk. The Best Buy Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 7,787 in Best Buy Co on March 9, 2025 and sell it today you would lose (741.00) from holding Best Buy Co or give up 9.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Best Buy Co
Performance |
| Timeline |
| Apple Inc |
| Best Buy |
Apple and Best Buy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Best Buy
The main advantage of trading using opposite Apple and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.The idea behind Apple Inc and Best Buy Co 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.| Best Buy vs. Jeffs Brands | Best Buy vs. Jumia Technologies AG | Best Buy vs. Natural Health Trend | Best Buy vs. Liquidity Services |
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 the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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