Correlation Between Aptus Collared and Aptus Drawdown

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

By analyzing existing cross correlation between Aptus Collared Income and Aptus Drawdown Managed, you can compare the effects of market volatilities on Aptus Collared and Aptus Drawdown 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 Aptus Collared with a short position of Aptus Drawdown. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptus Collared and Aptus Drawdown.

Diversification Opportunities for Aptus Collared and Aptus Drawdown

1.0

Correlation Coefficient

Aptus Collared  Aptus Drawdown

No risk reduction

The 3 months correlation between Aptus and Aptus is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Collared Income and Aptus Drawdown Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptus Drawdown Managed and Aptus Collared 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 Aptus Collared Income are associated (or correlated) with Aptus Drawdown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptus Drawdown Managed has no effect on the direction of Aptus Collared i.e., Aptus Collared and Aptus Drawdown go up and down completely randomly.

Pair Corralation between Aptus Collared and Aptus Drawdown

Given the investment horizon of 90 days Aptus Collared Income is expected to generate 0.81 times more return on investment than Aptus Drawdown. However, Aptus Collared Income is 1.23 times less risky than Aptus Drawdown. It trades about -0.07 of its potential returns per unit of risk. Aptus Drawdown Managed is currently generating about -0.07 per unit of risk. If you would invest  4,030  in Aptus Collared Income on December 28, 2024 and sell it today you would lose (123.00) from holding Aptus Collared Income or give up 3.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Aptus Collared Income  vs.  Aptus Drawdown Managed

Aptus Collared Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aptus Collared Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Aptus Collared is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Aptus Drawdown Managed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aptus Drawdown Managed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Aptus Drawdown is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aptus Collared and Aptus Drawdown

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

The idea behind Aptus Collared Income and Aptus Drawdown Managed 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.