Correlation Between Apollo Investment and Palo Alto
Can any of the company-specific risk be diversified away by investing in both Apollo Investment and Palo Alto 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 Palo Alto 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 Palo Alto Networks, you can compare the effects of market volatilities on Apollo Investment and Palo Alto 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 Palo Alto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Investment and Palo Alto.
Diversification Opportunities for Apollo Investment and Palo Alto
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Apollo and Palo is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment Corp and Palo Alto Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palo Alto Networks 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 Palo Alto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palo Alto Networks has no effect on the direction of Apollo Investment i.e., Apollo Investment and Palo Alto go up and down completely randomly.
Pair Corralation between Apollo Investment and Palo Alto
Assuming the 90 days trading horizon Apollo Investment is expected to generate 1.08 times less return on investment than Palo Alto. But when comparing it to its historical volatility, Apollo Investment Corp is 1.79 times less risky than Palo Alto. It trades about 0.36 of its potential returns per unit of risk. Palo Alto Networks is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 32,980 in Palo Alto Networks on September 1, 2024 and sell it today you would earn a total of 3,525 from holding Palo Alto Networks or generate 10.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Apollo Investment Corp vs. Palo Alto Networks
Performance |
| Timeline |
| Apollo Investment Corp |
| Palo Alto Networks |
Apollo Investment and Palo Alto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Investment and Palo Alto
The main advantage of trading using opposite Apollo Investment and Palo Alto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Investment position performs unexpectedly, Palo Alto 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 Palo Alto will offset losses from the drop in Palo Alto's long position.| Apollo Investment vs. USWE SPORTS AB | Apollo Investment vs. PARKEN Sport Entertainment | Apollo Investment vs. SPORTING | Apollo Investment vs. Transport International Holdings |
| Palo Alto vs. SENECA FOODS A | Palo Alto vs. Western Copper and | Palo Alto vs. Lifeway Foods | Palo Alto vs. AUSTEVOLL SEAFOOD |
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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