Correlation Between Ladder Capital and Apollo Commercial

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Can any of the company-specific risk be diversified away by investing in both Ladder Capital and Apollo Commercial 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 Ladder Capital and Apollo Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ladder Capital Corp and Apollo Commercial Real, you can compare the effects of market volatilities on Ladder Capital and Apollo Commercial 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 Ladder Capital with a short position of Apollo Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ladder Capital and Apollo Commercial.

Diversification Opportunities for Ladder Capital and Apollo Commercial

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ladder and Apollo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ladder Capital Corp and Apollo Commercial Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Commercial Real and Ladder Capital 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 Ladder Capital Corp are associated (or correlated) with Apollo Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Commercial Real has no effect on the direction of Ladder Capital i.e., Ladder Capital and Apollo Commercial go up and down completely randomly.

Pair Corralation between Ladder Capital and Apollo Commercial

Given the investment horizon of 90 days Ladder Capital Corp is expected to generate 0.79 times more return on investment than Apollo Commercial. However, Ladder Capital Corp is 1.27 times less risky than Apollo Commercial. It trades about 0.01 of its potential returns per unit of risk. Apollo Commercial Real is currently generating about -0.11 per unit of risk. If you would invest  1,177  in Ladder Capital Corp on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Ladder Capital Corp or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ladder Capital Corp  vs.  Apollo Commercial Real

 Performance 
       Timeline  
Ladder Capital Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ladder Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Ladder Capital is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
Apollo Commercial Real 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Apollo Commercial Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Ladder Capital and Apollo Commercial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ladder Capital and Apollo Commercial

The main advantage of trading using opposite Ladder Capital and Apollo Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ladder Capital position performs unexpectedly, Apollo Commercial 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 Apollo Commercial will offset losses from the drop in Apollo Commercial's long position.
The idea behind Ladder Capital Corp and Apollo Commercial Real 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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