Correlation Between Apollo Commercial and Ares Commercial
Can any of the company-specific risk be diversified away by investing in both Apollo Commercial and Ares Commercial 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 Ares Commercial 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 Ares Commercial Real, you can compare the effects of market volatilities on Apollo Commercial and Ares Commercial 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 Ares Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Commercial and Ares Commercial.
Diversification Opportunities for Apollo Commercial and Ares Commercial
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Apollo and Ares is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Commercial Real and Ares Commercial Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Commercial Real 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 Ares Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Commercial Real has no effect on the direction of Apollo Commercial i.e., Apollo Commercial and Ares Commercial go up and down completely randomly.
Pair Corralation between Apollo Commercial and Ares Commercial
Considering the 90-day investment horizon Apollo Commercial Real is expected to under-perform the Ares Commercial. But the stock apears to be less risky and, when comparing its historical volatility, Apollo Commercial Real is 1.46 times less risky than Ares Commercial. The stock trades about 0.0 of its potential returns per unit of risk. The Ares Commercial Real is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 607.00 in Ares Commercial Real on August 24, 2024 and sell it today you would earn a total of 109.00 from holding Ares Commercial Real or generate 17.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Apollo Commercial Real vs. Ares Commercial Real
Performance |
| Timeline |
| Apollo Commercial Real |
| Ares Commercial Real |
Apollo Commercial and Ares Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Commercial and Ares Commercial
The main advantage of trading using opposite Apollo Commercial and Ares Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Commercial position performs unexpectedly, Ares Commercial 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 Ares Commercial will offset losses from the drop in Ares Commercial's long position.| Apollo Commercial vs. Lument Finance Trust | Apollo Commercial vs. AG Mortgage Investment | Apollo Commercial vs. Rithm Capital Corp | Apollo Commercial vs. Cherry Hill Mortgage |
| Ares Commercial vs. Two Harbors Investments | Ares Commercial vs. Apollo Commercial Real | Ares Commercial vs. Ellington Financial | Ares Commercial vs. Dynex Capital |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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