Correlation Between State Street and Apollo Global

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

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

Diversification Opportunities for State Street and Apollo Global

-0.51

Correlation Coefficient

State Street  Apollo Global

Excellent diversification

The 3 months correlation between State and Apollo is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding State Street and Apollo Global Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Global Management and State Street 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 State Street are associated (or correlated) with Apollo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Global Management has no effect on the direction of State Street i.e., State Street and Apollo Global go up and down completely randomly.

Pair Corralation between State Street and Apollo Global

Assuming the 90 days trading horizon State Street is expected to under-perform the Apollo Global. But the preferred stock apears to be less risky and, when comparing its historical volatility, State Street is 4.47 times less risky than Apollo Global. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Apollo Global Management is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  11,511  in Apollo Global Management on October 4, 2024 and sell it today you would earn a total of  5,064  from holding Apollo Global Management or generate 43.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

State Street  vs.  Apollo Global Management

State Street

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Street has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, State Street is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Apollo Global Management

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Global Management are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Apollo Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with State Street and Apollo Global

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

The idea behind State Street and Apollo Global Management 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.