Correlation Between Apollo Commercial and Ladder Capital

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

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

Diversification Opportunities for Apollo Commercial and Ladder Capital

0.77

Correlation Coefficient

Apollo Commercial  Ladder Capital

Poor diversification

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

Pair Corralation between Apollo Commercial and Ladder Capital

Considering the 90-day investment horizon Apollo Commercial is expected to generate 2.29 times less return on investment than Ladder Capital. But when comparing it to its historical volatility, Apollo Commercial Real is 1.12 times less risky than Ladder Capital. It trades about 0.08 of its potential returns per unit of risk. Ladder Capital Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,133  in Ladder Capital Corp on September 5, 2024 and sell it today you would earn a total of  45.00  from holding Ladder Capital Corp or generate 3.97% return on investment over 90 days.

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

Apollo Commercial Real  vs.  Ladder Capital Corp

Apollo Commercial Real

Risk-Adjusted Performance

0 of 100

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 Corp

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Apollo Commercial and Ladder Capital

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

The idea behind Apollo Commercial Real and Ladder Capital 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.