Correlation Between Apollo Investment and GFL ENVIRONM

Can any of the company-specific risk be diversified away by investing in both Apollo Investment and GFL ENVIRONM 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 Investment and GFL ENVIRONM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apollo Investment Corp and GFL ENVIRONM, you can compare the effects of market volatilities on Apollo Investment and GFL ENVIRONM 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 Investment with a short position of GFL ENVIRONM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Investment and GFL ENVIRONM.

Diversification Opportunities for Apollo Investment and GFL ENVIRONM

0.95

Correlation Coefficient

Apollo Investment  GFL ENVIRONM

Almost no diversification

The 3 months correlation between Apollo and GFL is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment Corp and GFL ENVIRONM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFL ENVIRONM and Apollo Investment 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 Investment Corp are associated (or correlated) with GFL ENVIRONM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFL ENVIRONM has no effect on the direction of Apollo Investment i.e., Apollo Investment and GFL ENVIRONM go up and down completely randomly.

Pair Corralation between Apollo Investment and GFL ENVIRONM

Assuming the 90 days trading horizon Apollo Investment Corp is expected to under-perform the GFL ENVIRONM. But the stock apears to be less risky and, when comparing its historical volatility, Apollo Investment Corp is 1.29 times less risky than GFL ENVIRONM. The stock trades about -0.01 of its potential returns per unit of risk. The GFL ENVIRONM is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,617  in GFL ENVIRONM on October 4, 2024 and sell it today you would earn a total of  663.00  from holding GFL ENVIRONM or generate 18.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Apollo Investment Corp  vs.  GFL ENVIRONM

Apollo Investment Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Investment Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Apollo Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GFL ENVIRONM

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GFL ENVIRONM are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GFL ENVIRONM reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apollo Investment and GFL ENVIRONM

The main advantage of trading using opposite Apollo Investment and GFL ENVIRONM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Investment position performs unexpectedly, GFL ENVIRONM 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 GFL ENVIRONM will offset losses from the drop in GFL ENVIRONM's long position.

The idea behind Apollo Investment Corp and GFL ENVIRONM 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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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.