Correlation Between Aptus Defined and Aptus Drawdown

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Can any of the company-specific risk be diversified away by investing in both Aptus Defined 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 Aptus Defined and Aptus Drawdown into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptus Defined Risk and Aptus Drawdown Managed, you can compare the effects of market volatilities on Aptus Defined 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 Aptus Defined with a short position of Aptus Drawdown. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptus Defined and Aptus Drawdown.

Diversification Opportunities for Aptus Defined and Aptus Drawdown

AptusAptusDiversified AwayAptusAptusDiversified Away100%
-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between Aptus and Aptus is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Defined Risk 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 Aptus Defined 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 Defined Risk 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 Aptus Defined i.e., Aptus Defined and Aptus Drawdown go up and down completely randomly.

Pair Corralation between Aptus Defined and Aptus Drawdown

Given the investment horizon of 90 days Aptus Defined Risk is expected to under-perform the Aptus Drawdown. But the etf apears to be less risky and, when comparing its historical volatility, Aptus Defined Risk is 1.33 times less risky than Aptus Drawdown. The etf trades about -0.01 of its potential returns per unit of risk. The Aptus Drawdown Managed is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,543  in Aptus Drawdown Managed on September 16, 2024 and sell it today you would earn a total of  270.00  from holding Aptus Drawdown Managed or generate 5.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Aptus Defined Risk  vs.  Aptus Drawdown Managed

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -20246
JavaScript chart by amCharts 3.21.15DRSK ADME
       Timeline  
Aptus Defined Risk 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aptus Defined Risk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Aptus Defined is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec27.627.82828.228.428.628.829
Aptus Drawdown Managed 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Aptus Drawdown Managed are ranked lower than 11 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec4142434445464748

Aptus Defined and Aptus Drawdown Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.42-1.05-0.68-0.31-0.0059990.290.661.031.41.77 0.51.01.52.0
JavaScript chart by amCharts 3.21.15DRSK ADME
       Returns  

Pair Trading with Aptus Defined and Aptus Drawdown

The main advantage of trading using opposite Aptus Defined and Aptus Drawdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptus Defined 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 Aptus Defined Risk 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.
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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