Correlation Between Aptus Collared and Fidelity Dynamic

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

Diversification Opportunities for Aptus Collared and Fidelity Dynamic

0.98

Correlation Coefficient

Aptus Collared  Fidelity Dynamic

Almost no diversification

The 3 months correlation between Aptus and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Collared Income and Fidelity Dynamic Buffered in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Dynamic Buffered 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 Fidelity Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Dynamic Buffered has no effect on the direction of Aptus Collared i.e., Aptus Collared and Fidelity Dynamic go up and down completely randomly.

Pair Corralation between Aptus Collared and Fidelity Dynamic

Given the investment horizon of 90 days Aptus Collared Income is expected to under-perform the Fidelity Dynamic. In addition to that, Aptus Collared is 1.07 times more volatile than Fidelity Dynamic Buffered. It trades about -0.08 of its total potential returns per unit of risk. Fidelity Dynamic Buffered is currently generating about -0.08 per unit of volatility. If you would invest  2,748  in Fidelity Dynamic Buffered on December 20, 2024 and sell it today you would lose (93.00) from holding Fidelity Dynamic Buffered or give up 3.38% of portfolio value over 90 days.

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

Aptus Collared Income  vs.  Fidelity Dynamic Buffered

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.

Fidelity Dynamic Buffered

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Dynamic Buffered has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fidelity Dynamic is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aptus Collared and Fidelity Dynamic

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

The idea behind Aptus Collared Income and Fidelity Dynamic Buffered 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.