Correlation Between Aperture International and Aperture Discover

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

By analyzing existing cross correlation between Aperture International Equity and Aperture Discover Equity, you can compare the effects of market volatilities on Aperture International and Aperture Discover 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 Aperture International with a short position of Aperture Discover. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aperture International and Aperture Discover.

Diversification Opportunities for Aperture International and Aperture Discover

0.57

Correlation Coefficient

Aperture International  Aperture Discover

Very weak diversification

The 3 months correlation between Aperture and Aperture is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Aperture International Equity and Aperture Discover Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aperture Discover Equity and Aperture International 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 Aperture International Equity are associated (or correlated) with Aperture Discover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aperture Discover Equity has no effect on the direction of Aperture International i.e., Aperture International and Aperture Discover go up and down completely randomly.

Pair Corralation between Aperture International and Aperture Discover

Assuming the 90 days horizon Aperture International is expected to generate 1.38 times less return on investment than Aperture Discover. But when comparing it to its historical volatility, Aperture International Equity is 1.73 times less risky than Aperture Discover. It trades about 0.06 of its potential returns per unit of risk. Aperture Discover Equity is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,066  in Aperture Discover Equity on October 11, 2024 and sell it today you would earn a total of  78.00  from holding Aperture Discover Equity or generate 7.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.22%
Values	Daily Returns

Aperture International Equity  vs.  Aperture Discover Equity

Aperture International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aperture International Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Aperture International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aperture Discover Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aperture Discover Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aperture Discover is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aperture International and Aperture Discover

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

The idea behind Aperture International Equity and Aperture Discover Equity 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 Global Correlations module to find global opportunities by holding instruments from different markets.