Correlation Between William Blair and Apollo Senior

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

By analyzing existing cross correlation between William Blair Emerging and Apollo Senior Floating, you can compare the effects of market volatilities on William Blair and Apollo Senior 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 William Blair with a short position of Apollo Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Blair and Apollo Senior.

Diversification Opportunities for William Blair and Apollo Senior

0.77

Correlation Coefficient

William Blair  Apollo Senior

Poor diversification

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

Pair Corralation between William Blair and Apollo Senior

Assuming the 90 days horizon William Blair is expected to generate 2.83 times less return on investment than Apollo Senior. But when comparing it to its historical volatility, William Blair Emerging is 1.21 times less risky than Apollo Senior. It trades about 0.05 of its potential returns per unit of risk. Apollo Senior Floating is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,392  in Apollo Senior Floating on March 3, 2024 and sell it today you would earn a total of  78.00  from holding Apollo Senior Floating or generate 5.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

William Blair Emerging  vs.  Apollo Senior Floating

William Blair Emerging

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in William Blair Emerging are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, William Blair is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Apollo Senior Floating

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Senior Floating are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Apollo Senior is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with William Blair and Apollo Senior

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

The idea behind William Blair Emerging and Apollo Senior Floating 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 Global Correlations module to find global opportunities by holding instruments from different markets.