Correlation Between Apollo Global and BlackRock

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

Diversification Opportunities for Apollo Global and BlackRock

0.4

Correlation Coefficient

Apollo Global  BlackRock

Very weak diversification

The 3 months correlation between Apollo and BlackRock is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Global Management and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock 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 BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of Apollo Global i.e., Apollo Global and BlackRock go up and down completely randomly.

Pair Corralation between Apollo Global and BlackRock

Considering the 90-day investment horizon Apollo Global Management is expected to under-perform the BlackRock. In addition to that, Apollo Global is 7.25 times more volatile than BlackRock. It trades about -0.21 of its total potential returns per unit of risk. BlackRock is currently generating about -0.22 per unit of volatility. If you would invest  81,621  in BlackRock on January 25, 2024 and sell it today you would lose (5,019) from holding BlackRock or give up 6.15% of portfolio value over 90 days.

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

Apollo Global Management  vs.  BlackRock

Apollo Global Management

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Global Management are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Apollo Global displayed solid returns over the last few months and may actually be approaching a breakup point.

BlackRock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, BlackRock is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Apollo Global and BlackRock

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

The idea behind Apollo Global Management and BlackRock 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.