Correlation Between Apollo Investment and Easterly Government

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

By analyzing existing cross correlation between Apollo Investment Corp and Easterly Government Properties, you can compare the effects of market volatilities on Apollo Investment and Easterly Government 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 Investment with a short position of Easterly Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Investment and Easterly Government.

Diversification Opportunities for Apollo Investment and Easterly Government

0.55

Correlation Coefficient

Apollo Investment  Easterly Government

Very weak diversification

The 3 months correlation between Apollo and Easterly is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment Corp and Easterly Government Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easterly Government and Apollo Investment 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 Investment Corp are associated (or correlated) with Easterly Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easterly Government has no effect on the direction of Apollo Investment i.e., Apollo Investment and Easterly Government go up and down completely randomly.

Pair Corralation between Apollo Investment and Easterly Government

Assuming the 90 days trading horizon Apollo Investment is expected to generate 1.06 times less return on investment than Easterly Government. But when comparing it to its historical volatility, Apollo Investment Corp is 1.39 times less risky than Easterly Government. It trades about 0.15 of its potential returns per unit of risk. Easterly Government Properties is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,740  in Easterly Government Properties on April 24, 2025 and sell it today you would earn a total of  220.00  from holding Easterly Government Properties or generate 12.64% return on investment over 90 days.

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

Apollo Investment Corp  vs.  Easterly Government Properties

Apollo Investment Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Investment Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Apollo Investment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Easterly Government

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Easterly Government Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Easterly Government reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apollo Investment and Easterly Government

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

The idea behind Apollo Investment Corp and Easterly Government Properties 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..