Correlation Between Aptus Drawdown and Global X

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

Diversification Opportunities for Aptus Drawdown and Global X

0.99

Correlation Coefficient

Aptus Drawdown  Global X

No risk reduction

The 3 months correlation between Aptus and Global is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Drawdown Managed and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP 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 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 SP has no effect on the direction of Aptus Drawdown i.e., Aptus Drawdown and Global X go up and down completely randomly.

Pair Corralation between Aptus Drawdown and Global X

Given the investment horizon of 90 days Aptus Drawdown Managed is expected to generate 0.99 times more return on investment than Global X. However, Aptus Drawdown Managed is 1.01 times less risky than Global X. It trades about -0.04 of its potential returns per unit of risk. Global X SP is currently generating about -0.04 per unit of risk. If you would invest  4,806  in Aptus Drawdown Managed on December 1, 2024 and sell it today you would lose (96.00) from holding Aptus Drawdown Managed or give up 2.0% of portfolio value over 90 days.

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

Aptus Drawdown Managed  vs.  Global X SP

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.

Global X SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X SP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Global X is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Aptus Drawdown and Global X

The main advantage of trading using opposite Aptus Drawdown and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptus Drawdown 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 Drawdown Managed and Global X SP 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.