Correlation Between Aptus Collared and Global X

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

Diversification Opportunities for Aptus Collared and Global X

0.95

Correlation Coefficient

Aptus Collared  Global X

Almost no diversification

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

Pair Corralation between Aptus Collared and Global X

Given the investment horizon of 90 days Aptus Collared is expected to generate 2.06 times less return on investment than Global X. But when comparing it to its historical volatility, Aptus Collared Income is 1.31 times less risky than Global X. It trades about 0.14 of its potential returns per unit of risk. Global X NASDAQ is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,942  in Global X NASDAQ on September 16, 2024 and sell it today you would earn a total of  297.00  from holding Global X NASDAQ or generate 10.1% 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.  Global X NASDAQ

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 latest stock price disarray, may contribute to short-term losses for the investors.

Global X NASDAQ

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X NASDAQ are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating essential indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aptus Collared and Global X

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

The idea behind Aptus Collared Income and Global X NASDAQ 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..