Correlation Between Apollo Commercial and Arbor Realty
Can any of the company-specific risk be diversified away by investing in both Apollo Commercial and Arbor Realty 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 Commercial and Arbor Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apollo Commercial Real and Arbor Realty Trust, you can compare the effects of market volatilities on Apollo Commercial and Arbor Realty 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 Commercial with a short position of Arbor Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Commercial and Arbor Realty.
Diversification Opportunities for Apollo Commercial and Arbor Realty
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Apollo and Arbor is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Commercial Real and Arbor Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Realty Trust and Apollo Commercial 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 Commercial Real are associated (or correlated) with Arbor Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Realty Trust has no effect on the direction of Apollo Commercial i.e., Apollo Commercial and Arbor Realty go up and down completely randomly.
Pair Corralation between Apollo Commercial and Arbor Realty
Considering the 90-day investment horizon Apollo Commercial Real is expected to under-perform the Arbor Realty. But the stock apears to be less risky and, when comparing its historical volatility, Apollo Commercial Real is 1.51 times less risky than Arbor Realty. The stock trades about -0.01 of its potential returns per unit of risk. The Arbor Realty Trust is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,324 in Arbor Realty Trust on August 30, 2024 and sell it today you would earn a total of 160.00 from holding Arbor Realty Trust or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apollo Commercial Real vs. Arbor Realty Trust
Performance |
| Timeline |
| Apollo Commercial Real |
| Arbor Realty Trust |
Apollo Commercial and Arbor Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Commercial and Arbor Realty
The main advantage of trading using opposite Apollo Commercial and Arbor Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Commercial position performs unexpectedly, Arbor Realty 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 Arbor Realty will offset losses from the drop in Arbor Realty's long position.| Apollo Commercial vs. Ellington Residential Mortgage | Apollo Commercial vs. Ares Commercial Real | Apollo Commercial vs. Cherry Hill Mortgage | Apollo Commercial vs. AGNC Investment Corp |
| Arbor Realty vs. Starwood Property Trust | Arbor Realty vs. Ready Capital Corp | Arbor Realty vs. Two Harbors Investments | Arbor Realty vs. AGNC Investment Corp |
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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