Correlation Between First Trust and Apollo Senior
Can any of the company-specific risk be diversified away by investing in both First Trust and Apollo Senior 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 First Trust and Apollo Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Senior and Apollo Senior Floating, you can compare the effects of market volatilities on First Trust and Apollo Senior 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 First Trust with a short position of Apollo Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Apollo Senior.
Diversification Opportunities for First Trust and Apollo Senior
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Apollo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and Apollo Senior Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Senior Floating and First Trust 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 First Trust Senior are associated (or correlated) with Apollo Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Senior Floating has no effect on the direction of First Trust i.e., First Trust and Apollo Senior go up and down completely randomly.
Pair Corralation between First Trust and Apollo Senior
Considering the 90-day investment horizon First Trust is expected to generate 1.71 times less return on investment than Apollo Senior. But when comparing it to its historical volatility, First Trust Senior is 1.1 times less risky than Apollo Senior. It trades about 0.09 of its potential returns per unit of risk. Apollo Senior Floating is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,036 in Apollo Senior Floating on August 24, 2024 and sell it today you would earn a total of 450.00 from holding Apollo Senior Floating or generate 43.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 82.26% |
| Values | Daily Returns |
First Trust Senior vs. Apollo Senior Floating
Performance |
| Timeline |
| First Trust Senior |
| Apollo Senior Floating |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and Apollo Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Apollo Senior
The main advantage of trading using opposite First Trust and Apollo Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Apollo Senior 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 Senior will offset losses from the drop in Apollo Senior's long position.| First Trust vs. Blackstone Gso Long | First Trust vs. Eaton Vance Senior | First Trust vs. Western Asset Global | First Trust vs. Western Asset Global |
| Apollo Senior vs. Blackstone Gso Strategic | Apollo Senior vs. First Trust Senior | Apollo Senior vs. BlackRock Floating Rate | Apollo Senior vs. Eaton Vance Senior |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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