Correlation Between Apollo Investment and DeVry Education

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

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

Diversification Opportunities for Apollo Investment and DeVry Education

0.9

Correlation Coefficient

Apollo Investment  DeVry Education

Almost no diversification

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

Pair Corralation between Apollo Investment and DeVry Education

Assuming the 90 days trading horizon Apollo Investment Corp is expected to generate 0.52 times more return on investment than DeVry Education. However, Apollo Investment Corp is 1.91 times less risky than DeVry Education. It trades about 0.07 of its potential returns per unit of risk. DeVry Education Group is currently generating about 0.01 per unit of risk. If you would invest  1,268  in Apollo Investment Corp on September 22, 2024 and sell it today you would earn a total of  16.00  from holding Apollo Investment Corp or generate 1.26% return on investment over 90 days.

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

Apollo Investment Corp  vs.  DeVry Education Group

Apollo Investment Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Investment Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Apollo Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

DeVry Education Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DeVry Education Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, DeVry Education reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apollo Investment and DeVry Education

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

The idea behind Apollo Investment Corp and DeVry Education Group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.