Correlation Between American Customer and Aptus Drawdown

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

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

Diversification Opportunities for American Customer and Aptus Drawdown

0.94

Correlation Coefficient

American Customer  Aptus Drawdown

Almost no diversification

The 3 months correlation between American and Aptus is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Customer Satisfaction 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 American Customer 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 American Customer Satisfaction 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 American Customer i.e., American Customer and Aptus Drawdown go up and down completely randomly.

Pair Corralation between American Customer and Aptus Drawdown

Given the investment horizon of 90 days American Customer Satisfaction is expected to generate 1.16 times more return on investment than Aptus Drawdown. However, American Customer is 1.16 times more volatile than Aptus Drawdown Managed. It trades about 0.23 of its potential returns per unit of risk. Aptus Drawdown Managed is currently generating about 0.16 per unit of risk. If you would invest  5,716  in American Customer Satisfaction on September 17, 2024 and sell it today you would earn a total of  608.00  from holding American Customer Satisfaction or generate 10.64% return on investment over 90 days.

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

American Customer Satisfaction  vs.  Aptus Drawdown Managed

American Customer

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Customer Satisfaction are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, American Customer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aptus Drawdown Managed

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aptus Drawdown Managed are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. 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 American Customer and Aptus Drawdown

The main advantage of trading using opposite American Customer and Aptus Drawdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Customer 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 American Customer Satisfaction 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.