Correlation Between Apollo Investment and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Apollo Investment and Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley, you can compare the effects of market volatilities on Apollo Investment and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Investment and Morgan Stanley.
Diversification Opportunities for Apollo Investment and Morgan Stanley
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Apollo and Morgan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment Corp and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley has no effect on the direction of Apollo Investment i.e., Apollo Investment and Morgan Stanley go up and down completely randomly.
Pair Corralation between Apollo Investment and Morgan Stanley
Assuming the 90 days trading horizon Apollo Investment is expected to generate 1.96 times less return on investment than Morgan Stanley. But when comparing it to its historical volatility, Apollo Investment Corp is 2.67 times less risky than Morgan Stanley. It trades about 0.31 of its potential returns per unit of risk. Morgan Stanley is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 10,820 in Morgan Stanley on September 2, 2024 and sell it today you would earn a total of 1,692 from holding Morgan Stanley or generate 15.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apollo Investment Corp vs. Morgan Stanley
Performance |
| Timeline |
| Apollo Investment Corp |
| Morgan Stanley |
Apollo Investment and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Investment and Morgan Stanley
The main advantage of trading using opposite Apollo Investment and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Investment position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.| Apollo Investment vs. Charter Communications | Apollo Investment vs. Data3 Limited | Apollo Investment vs. Hyrican Informationssysteme Aktiengesellschaft | Apollo Investment vs. DATAGROUP SE |
| Morgan Stanley vs. The Goldman Sachs | Morgan Stanley vs. Superior Plus Corp | Morgan Stanley vs. NMI Holdings | Morgan Stanley vs. Origin Agritech |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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