Correlation Between Aptus Collared and Core Alternative

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

Diversification Opportunities for Aptus Collared and Core Alternative

0.05

Correlation Coefficient

Aptus Collared  Core Alternative

Significant diversification

The 3 months correlation between Aptus and Core is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Collared Income and Core Alternative ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Alternative ETF 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 Core Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Alternative ETF has no effect on the direction of Aptus Collared i.e., Aptus Collared and Core Alternative go up and down completely randomly.

Pair Corralation between Aptus Collared and Core Alternative

Given the investment horizon of 90 days Aptus Collared Income is expected to under-perform the Core Alternative. But the etf apears to be less risky and, when comparing its historical volatility, Aptus Collared Income is 1.06 times less risky than Core Alternative. The etf trades about -0.07 of its potential returns per unit of risk. The Core Alternative ETF is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,621  in Core Alternative ETF on December 5, 2024 and sell it today you would earn a total of  51.00  from holding Core Alternative ETF or generate 1.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Aptus Collared Income  vs.  Core Alternative ETF

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.

Core Alternative ETF

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Core Alternative ETF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Core Alternative is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Aptus Collared and Core Alternative

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

The idea behind Aptus Collared Income and Core Alternative ETF 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 Global Correlations module to find global opportunities by holding instruments from different markets.