Correlation Between Aptus Drawdown and Amplify BlackSwan

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

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

Diversification Opportunities for Aptus Drawdown and Amplify BlackSwan

0.87

Correlation Coefficient

Aptus Drawdown  Amplify BlackSwan

Very poor diversification

The 3 months correlation between Aptus and Amplify is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Drawdown Managed and Amplify BlackSwan Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify BlackSwan Growth and Aptus Drawdown 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 Drawdown Managed are associated (or correlated) with Amplify BlackSwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify BlackSwan Growth has no effect on the direction of Aptus Drawdown i.e., Aptus Drawdown and Amplify BlackSwan go up and down completely randomly.

Pair Corralation between Aptus Drawdown and Amplify BlackSwan

Given the investment horizon of 90 days Aptus Drawdown Managed is expected to under-perform the Amplify BlackSwan. In addition to that, Aptus Drawdown is 1.29 times more volatile than Amplify BlackSwan Growth. It trades about -0.1 of its total potential returns per unit of risk. Amplify BlackSwan Growth is currently generating about -0.07 per unit of volatility. If you would invest  2,952  in Amplify BlackSwan Growth on December 29, 2024 and sell it today you would lose (90.00) from holding Amplify BlackSwan Growth or give up 3.05% of portfolio value over 90 days.

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

Aptus Drawdown Managed  vs.  Amplify BlackSwan Growth

Aptus Drawdown Managed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aptus Drawdown Managed has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Amplify BlackSwan Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amplify BlackSwan Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Amplify BlackSwan is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aptus Drawdown and Amplify BlackSwan

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

The idea behind Aptus Drawdown Managed and Amplify BlackSwan Growth 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 Transaction History module to view history of all your transactions and understand their impact on performance.