Correlation Between Entravision Communications and Apollo Investment
Can any of the company-specific risk be diversified away by investing in both Entravision Communications and Apollo Investment 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 Entravision Communications and Apollo Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entravision Communications and Apollo Investment Corp, you can compare the effects of market volatilities on Entravision Communications and Apollo Investment 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 Entravision Communications with a short position of Apollo Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and Apollo Investment.
Diversification Opportunities for Entravision Communications and Apollo Investment
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Entravision and Apollo is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Apollo Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Investment Corp and Entravision Communications 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 Entravision Communications are associated (or correlated) with Apollo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Investment Corp has no effect on the direction of Entravision Communications i.e., Entravision Communications and Apollo Investment go up and down completely randomly.
Pair Corralation between Entravision Communications and Apollo Investment
Assuming the 90 days horizon Entravision Communications is expected to generate 3.08 times less return on investment than Apollo Investment. In addition to that, Entravision Communications is 4.74 times more volatile than Apollo Investment Corp. It trades about 0.01 of its total potential returns per unit of risk. Apollo Investment Corp is currently generating about 0.11 per unit of volatility. If you would invest 1,268 in Apollo Investment Corp on October 20, 2024 and sell it today you would earn a total of 33.00 from holding Apollo Investment Corp or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entravision Communications vs. Apollo Investment Corp
Performance |
| Timeline |
| Entravision Communications |
| Apollo Investment Corp |
Entravision Communications and Apollo Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entravision Communications and Apollo Investment
The main advantage of trading using opposite Entravision Communications and Apollo Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications position performs unexpectedly, Apollo Investment 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 Apollo Investment will offset losses from the drop in Apollo Investment's long position.The idea behind Entravision Communications and Apollo Investment Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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