Correlation Between Apollo Global and American Express

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

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

Diversification Opportunities for Apollo Global and American Express

0.92

Correlation Coefficient

Apollo Global  American Express

Almost no diversification

The 3 months correlation between Apollo and American is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Global Management and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Apollo Global 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 Global Management are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Apollo Global i.e., Apollo Global and American Express go up and down completely randomly.

Pair Corralation between Apollo Global and American Express

Considering the 90-day investment horizon Apollo Global Management is expected to under-perform the American Express. In addition to that, Apollo Global is 1.69 times more volatile than American Express. It trades about -0.13 of its total potential returns per unit of risk. American Express is currently generating about -0.2 per unit of volatility. If you would invest  22,721  in American Express on January 20, 2024 and sell it today you would lose (971.00) from holding American Express or give up 4.27% of portfolio value over 90 days.

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

Apollo Global Management  vs.  American Express

Apollo Global Management

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Global Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Apollo Global may actually be approaching a critical reversion point that can send shares even higher in May 2024.

American Express

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, American Express reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apollo Global and American Express

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

The idea behind Apollo Global Management and American Express 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.