Correlation Between Apollo Investment and Macquarie Group
Can any of the company-specific risk be diversified away by investing in both Apollo Investment and Macquarie Group 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 Apollo Investment and Macquarie Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apollo Investment Corp and Macquarie Group Limited, you can compare the effects of market volatilities on Apollo Investment and Macquarie Group 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 Apollo Investment with a short position of Macquarie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Investment and Macquarie Group.
Diversification Opportunities for Apollo Investment and Macquarie Group
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apollo and Macquarie is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment Corp and Macquarie Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Apollo Investment 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 Apollo Investment Corp are associated (or correlated) with Macquarie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Apollo Investment i.e., Apollo Investment and Macquarie Group go up and down completely randomly.
Pair Corralation between Apollo Investment and Macquarie Group
Assuming the 90 days trading horizon Apollo Investment is expected to generate 1.83 times less return on investment than Macquarie Group. But when comparing it to its historical volatility, Apollo Investment Corp is 1.24 times less risky than Macquarie Group. It trades about 0.07 of its potential returns per unit of risk. Macquarie Group Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 9,778 in Macquarie Group Limited on August 29, 2024 and sell it today you would earn a total of 4,454 from holding Macquarie Group Limited or generate 45.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Apollo Investment Corp vs. Macquarie Group Limited
Performance |
| Timeline |
| Apollo Investment Corp |
| Macquarie Group |
Apollo Investment and Macquarie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Investment and Macquarie Group
The main advantage of trading using opposite Apollo Investment and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Investment position performs unexpectedly, Macquarie Group 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 Macquarie Group will offset losses from the drop in Macquarie Group's long position.| Apollo Investment vs. Macquarie Group Limited | Apollo Investment vs. MSCI Inc | Apollo Investment vs. Superior Plus Corp | Apollo Investment vs. NMI Holdings |
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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 the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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