Correlation Between Visa and Apollo Commercial

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

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

Diversification Opportunities for Visa and Apollo Commercial

0.75

Correlation Coefficient

Visa  Apollo Commercial

Poor diversification

The 3 months correlation between Visa and Apollo is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Apollo Commercial Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Commercial Real and Visa 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 Visa Class A are associated (or correlated) with Apollo Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Commercial Real has no effect on the direction of Visa i.e., Visa and Apollo Commercial go up and down completely randomly.

Pair Corralation between Visa and Apollo Commercial

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.7 times more return on investment than Apollo Commercial. However, Visa Class A is 1.42 times less risky than Apollo Commercial. It trades about 0.12 of its potential returns per unit of risk. Apollo Commercial Real is currently generating about 0.07 per unit of risk. If you would invest  31,251  in Visa Class A on January 4, 2025 and sell it today you would earn a total of  2,688  from holding Visa Class A or generate 8.6% return on investment over 90 days.

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

Visa Class A  vs.  Apollo Commercial Real

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Apollo Commercial Real

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Commercial Real are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Apollo Commercial may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Visa and Apollo Commercial

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

The idea behind Visa Class A and Apollo Commercial Real 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.