Correlation Between National Bank and Apollo Investment
Can any of the company-specific risk be diversified away by investing in both National Bank 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 National Bank and Apollo Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank Holdings and Apollo Investment Corp, you can compare the effects of market volatilities on National Bank 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 National Bank with a short position of Apollo Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Apollo Investment.
Diversification Opportunities for National Bank and Apollo Investment
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Apollo is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings 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 National Bank 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 National Bank Holdings 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 National Bank i.e., National Bank and Apollo Investment go up and down completely randomly.
Pair Corralation between National Bank and Apollo Investment
Assuming the 90 days horizon National Bank Holdings is expected to generate 2.8 times more return on investment than Apollo Investment. However, National Bank is 2.8 times more volatile than Apollo Investment Corp. It trades about 0.16 of its potential returns per unit of risk. Apollo Investment Corp is currently generating about 0.39 per unit of risk. If you would invest 3,994 in National Bank Holdings on September 4, 2024 and sell it today you would earn a total of 426.00 from holding National Bank Holdings or generate 10.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. Apollo Investment Corp
Performance |
| Timeline |
| National Bank Holdings |
| Apollo Investment Corp |
National Bank and Apollo Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Apollo Investment
The main advantage of trading using opposite National Bank and Apollo Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank 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.| National Bank vs. US Bancorp | National Bank vs. The PNC Financial | National Bank vs. Fifth Third Bancorp | National Bank vs. Regions Financial |
| Apollo Investment vs. The Goldman Sachs | Apollo Investment vs. The Goldman Sachs | Apollo Investment vs. Superior Plus Corp | Apollo Investment vs. NMI Holdings |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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