Correlation Between Apollo Global and Monroe Capital

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

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

Diversification Opportunities for Apollo Global and Monroe Capital

0.78

Correlation Coefficient

Apollo Global  Monroe Capital

Poor diversification

The 3 months correlation between Apollo and Monroe is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Global Management and Monroe Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monroe Capital Corp and Apollo Global 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 Global Management are associated (or correlated) with Monroe Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monroe Capital Corp has no effect on the direction of Apollo Global i.e., Apollo Global and Monroe Capital go up and down completely randomly.

Pair Corralation between Apollo Global and Monroe Capital

Considering the 90-day investment horizon Apollo Global Management is expected to generate 1.57 times more return on investment than Monroe Capital. However, Apollo Global is 1.57 times more volatile than Monroe Capital Corp. It trades about 0.36 of its potential returns per unit of risk. Monroe Capital Corp is currently generating about 0.13 per unit of risk. If you would invest  10,836  in Apollo Global Management on September 11, 2024 and sell it today you would earn a total of  6,635  from holding Apollo Global Management or generate 61.23% return on investment over 90 days.

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

Apollo Global Management  vs.  Monroe Capital Corp

Apollo Global Management

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Global Management are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Apollo Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Monroe Capital Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monroe Capital Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Monroe Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Apollo Global and Monroe Capital

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

The idea behind Apollo Global Management and Monroe Capital 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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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.