Correlation Between Aptus Collared and WisdomTree Target

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

Diversification Opportunities for Aptus Collared and WisdomTree Target

0.95

Correlation Coefficient

Aptus Collared  WisdomTree Target

Almost no diversification

The 3 months correlation between Aptus and WisdomTree is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Collared Income and WisdomTree Target Range in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Target Range 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 WisdomTree Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Target Range has no effect on the direction of Aptus Collared i.e., Aptus Collared and WisdomTree Target go up and down completely randomly.

Pair Corralation between Aptus Collared and WisdomTree Target

Given the investment horizon of 90 days Aptus Collared is expected to generate 1.19 times less return on investment than WisdomTree Target. But when comparing it to its historical volatility, Aptus Collared Income is 1.33 times less risky than WisdomTree Target. It trades about 0.24 of its potential returns per unit of risk. WisdomTree Target Range is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,434  in WisdomTree Target Range on September 17, 2024 and sell it today you would earn a total of  48.00  from holding WisdomTree Target Range or generate 1.97% return on investment over 90 days.

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

Aptus Collared Income  vs.  WisdomTree Target Range

Aptus Collared Income

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aptus Collared Income are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Aptus Collared is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

WisdomTree Target Range

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Target Range are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, WisdomTree Target is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Aptus Collared and WisdomTree Target

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

The idea behind Aptus Collared Income and WisdomTree Target Range 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.