Correlation Between Performance Food and Apollo Investment

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

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

Diversification Opportunities for Performance Food and Apollo Investment

0.9

Correlation Coefficient

Performance Food  Apollo Investment

Almost no diversification

The 3 months correlation between Performance and Apollo is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Apollo Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Investment Corp and Performance Food 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 Performance Food Group are associated (or correlated) with Apollo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Investment Corp has no effect on the direction of Performance Food i.e., Performance Food and Apollo Investment go up and down completely randomly.

Pair Corralation between Performance Food and Apollo Investment

Assuming the 90 days trading horizon Performance Food Group is expected to generate 1.19 times more return on investment than Apollo Investment. However, Performance Food is 1.19 times more volatile than Apollo Investment Corp. It trades about 0.06 of its potential returns per unit of risk. Apollo Investment Corp is currently generating about 0.07 per unit of risk. If you would invest  5,550  in Performance Food Group on October 24, 2024 and sell it today you would earn a total of  2,900  from holding Performance Food Group or generate 52.25% return on investment over 90 days.

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

Performance Food Group  vs.  Apollo Investment Corp

Performance Food

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Performance Food may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Apollo Investment Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Investment Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Apollo Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Performance Food and Apollo Investment

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

The idea behind Performance Food Group and Apollo Investment 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.