Correlation Between Apollo Bancorp and Grand River

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

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

Diversification Opportunities for Apollo Bancorp and Grand River

0.66

Correlation Coefficient

Apollo Bancorp  Grand River

Poor diversification

The 3 months correlation between Apollo and Grand is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Bancorp and Grand River Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand River Commerce and Apollo Bancorp 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 Bancorp are associated (or correlated) with Grand River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand River Commerce has no effect on the direction of Apollo Bancorp i.e., Apollo Bancorp and Grand River go up and down completely randomly.

Pair Corralation between Apollo Bancorp and Grand River

Given the investment horizon of 90 days Apollo Bancorp is expected to generate 3.83 times less return on investment than Grand River. But when comparing it to its historical volatility, Apollo Bancorp is 9.39 times less risky than Grand River. It trades about 0.32 of its potential returns per unit of risk. Grand River Commerce is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  285.00  in Grand River Commerce on September 5, 2024 and sell it today you would earn a total of  25.00  from holding Grand River Commerce or generate 8.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Apollo Bancorp  vs.  Grand River Commerce

Apollo Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Apollo Bancorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Grand River Commerce

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grand River Commerce are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Grand River may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Apollo Bancorp and Grand River

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

The idea behind Apollo Bancorp and Grand River Commerce 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .