Correlation Between Apollo Global and Royce Value

Can any of the company-specific risk be diversified away by investing in both Apollo Global and Royce Value 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 Royce Value 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 Royce Value Closed, you can compare the effects of market volatilities on Apollo Global and Royce Value 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 Royce Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Global and Royce Value.

Diversification Opportunities for Apollo Global and Royce Value

0.72

Correlation Coefficient

Apollo Global  Royce Value

Poor diversification

The 3 months correlation between Apollo and Royce is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Global Management and Royce Value Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Value Closed 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 Royce Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Value Closed has no effect on the direction of Apollo Global i.e., Apollo Global and Royce Value go up and down completely randomly.

Pair Corralation between Apollo Global and Royce Value

Considering the 90-day investment horizon Apollo Global Management is expected to under-perform the Royce Value. In addition to that, Apollo Global is 2.3 times more volatile than Royce Value Closed. It trades about -0.1 of its total potential returns per unit of risk. Royce Value Closed is currently generating about -0.1 per unit of volatility. If you would invest  1,539  in Royce Value Closed on December 28, 2024 and sell it today you would lose (90.00) from holding Royce Value Closed or give up 5.85% of portfolio value over 90 days.

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

Apollo Global Management  vs.  Royce Value Closed

Apollo Global Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apollo Global Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Royce Value Closed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royce Value Closed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Royce Value is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apollo Global and Royce Value

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

The idea behind Apollo Global Management and Royce Value Closed 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..