Correlation Between Apollo Global and TPG

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

Diversification Opportunities for Apollo Global and TPG

0.69

Correlation Coefficient

Apollo Global  TPG

Poor diversification

The 3 months correlation between Apollo and TPG is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Global Management and TPG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Inc 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 TPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Inc has no effect on the direction of Apollo Global i.e., Apollo Global and TPG go up and down completely randomly.

Pair Corralation between Apollo Global and TPG

Considering the 90-day investment horizon Apollo Global Management is expected to generate 0.96 times more return on investment than TPG. However, Apollo Global Management is 1.04 times less risky than TPG. It trades about 0.1 of its potential returns per unit of risk. TPG Inc is currently generating about 0.07 per unit of risk. If you would invest  6,867  in Apollo Global Management on November 19, 2024 and sell it today you would earn a total of  9,414  from holding Apollo Global Management or generate 137.09% 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.  TPG Inc

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 very healthy basic indicators, Apollo Global is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

TPG Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days TPG Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Apollo Global and TPG

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

The idea behind Apollo Global Management and TPG Inc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.