Correlation Between Apollo Commercial and EZCORP

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

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

Diversification Opportunities for Apollo Commercial and EZCORP

0.15

Correlation Coefficient

Apollo Commercial  EZCORP

Average diversification

The 3 months correlation between Apollo and EZCORP is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Commercial Real and EZCORP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZCORP Inc and Apollo Commercial 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 Commercial Real are associated (or correlated) with EZCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZCORP Inc has no effect on the direction of Apollo Commercial i.e., Apollo Commercial and EZCORP go up and down completely randomly.

Pair Corralation between Apollo Commercial and EZCORP

Considering the 90-day investment horizon Apollo Commercial Real is expected to under-perform the EZCORP. In addition to that, Apollo Commercial is 1.24 times more volatile than EZCORP Inc. It trades about -0.12 of its total potential returns per unit of risk. EZCORP Inc is currently generating about -0.04 per unit of volatility. If you would invest  1,071  in EZCORP Inc on February 4, 2024 and sell it today you would lose (28.00) from holding EZCORP Inc or give up 2.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Apollo Commercial Real  vs.  EZCORP Inc

Apollo Commercial Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Commercial Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Apollo Commercial is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

EZCORP Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EZCORP Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, EZCORP is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Apollo Commercial and EZCORP

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

The idea behind Apollo Commercial Real and EZCORP Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.