Correlation Between Apollo Commercial and Redwood Trust
Can any of the company-specific risk be diversified away by investing in both Apollo Commercial and Redwood Trust 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 Redwood Trust 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 Redwood Trust, you can compare the effects of market volatilities on Apollo Commercial and Redwood Trust 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 Redwood Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Commercial and Redwood Trust.
Diversification Opportunities for Apollo Commercial and Redwood Trust
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apollo and Redwood is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Commercial Real and Redwood Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood 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 Redwood Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Trust has no effect on the direction of Apollo Commercial i.e., Apollo Commercial and Redwood Trust go up and down completely randomly.
Pair Corralation between Apollo Commercial and Redwood Trust
Considering the 90-day investment horizon Apollo Commercial Real is expected to generate 0.84 times more return on investment than Redwood Trust. However, Apollo Commercial Real is 1.19 times less risky than Redwood Trust. It trades about 0.01 of its potential returns per unit of risk. Redwood Trust is currently generating about -0.12 per unit of risk. If you would invest 915.00 in Apollo Commercial Real on August 26, 2024 and sell it today you would earn a total of 4.00 from holding Apollo Commercial Real or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apollo Commercial Real vs. Redwood Trust
Performance |
| Timeline |
| Apollo Commercial Real |
| Redwood Trust |
Apollo Commercial and Redwood Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Commercial and Redwood Trust
The main advantage of trading using opposite Apollo Commercial and Redwood Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Commercial position performs unexpectedly, Redwood Trust 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 Redwood Trust will offset losses from the drop in Redwood Trust's long position.| Apollo Commercial vs. Blackstone Mortgage Trust | Apollo Commercial vs. Omega Healthcare Investors | Apollo Commercial vs. Medical Properties Trust |
| Redwood Trust vs. Blackstone Mortgage Trust | Redwood Trust vs. Omega Healthcare Investors | Redwood Trust vs. Medical Properties Trust |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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