Correlation Between Apollo Investment and Caterpillar
Can any of the company-specific risk be diversified away by investing in both Apollo Investment and Caterpillar 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 Caterpillar 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 Caterpillar, you can compare the effects of market volatilities on Apollo Investment and Caterpillar 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 Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Investment and Caterpillar.
Diversification Opportunities for Apollo Investment and Caterpillar
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Apollo and Caterpillar is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment Corp and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar 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 Caterpillar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caterpillar has no effect on the direction of Apollo Investment i.e., Apollo Investment and Caterpillar go up and down completely randomly.
Pair Corralation between Apollo Investment and Caterpillar
Assuming the 90 days trading horizon Apollo Investment Corp is expected to generate 0.71 times more return on investment than Caterpillar. However, Apollo Investment Corp is 1.4 times less risky than Caterpillar. It trades about 0.09 of its potential returns per unit of risk. Caterpillar is currently generating about 0.06 per unit of risk. If you would invest 1,286 in Apollo Investment Corp on November 3, 2024 and sell it today you would earn a total of 34.00 from holding Apollo Investment Corp or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apollo Investment Corp vs. Caterpillar
Performance |
| Timeline |
| Apollo Investment Corp |
| Caterpillar |
Apollo Investment and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Investment and Caterpillar
The main advantage of trading using opposite Apollo Investment and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Investment position performs unexpectedly, Caterpillar 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 Caterpillar will offset losses from the drop in Caterpillar's long position.| Apollo Investment vs. Morgan Stanley | Apollo Investment vs. Morgan Stanley | Apollo Investment vs. The Charles Schwab | Apollo Investment vs. The Goldman Sachs |
| Caterpillar vs. INVITATION HOMES DL | Caterpillar vs. Aedas Homes SA | Caterpillar vs. HAVERTY FURNITURE A | Caterpillar vs. Focus Home Interactive |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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