Correlation Between Apollo Commercial and TPG

Can any of the company-specific risk be diversified away by investing in both Apollo Commercial and TPG 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 TPG 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 TPG Inc, you can compare the effects of market volatilities on Apollo Commercial and TPG 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 TPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Commercial and TPG.

Diversification Opportunities for Apollo Commercial and TPG

-0.67

Correlation Coefficient

Apollo Commercial  TPG

Excellent diversification

The 3 months correlation between Apollo and TPG is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Commercial Real and TPG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Inc 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 TPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Inc has no effect on the direction of Apollo Commercial i.e., Apollo Commercial and TPG go up and down completely randomly.

Pair Corralation between Apollo Commercial and TPG

Considering the 90-day investment horizon Apollo Commercial Real is expected to under-perform the TPG. But the stock apears to be less risky and, when comparing its historical volatility, Apollo Commercial Real is 1.74 times less risky than TPG. The stock trades about -0.1 of its potential returns per unit of risk. The TPG Inc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  4,855  in TPG Inc on September 2, 2024 and sell it today you would earn a total of  2,141  from holding TPG Inc or generate 44.1% return on investment over 90 days.

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

Apollo Commercial Real  vs.  TPG Inc

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.

TPG Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TPG Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TPG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apollo Commercial and TPG

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

The idea behind Apollo Commercial Real and TPG Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.