Correlation Between Aptus Defined and Anfield Equity

Can any of the company-specific risk be diversified away by investing in both Aptus Defined and Anfield Equity 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 Anfield Equity 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 Anfield Equity Sector, you can compare the effects of market volatilities on Aptus Defined and Anfield Equity 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 Anfield Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptus Defined and Anfield Equity.

Diversification Opportunities for Aptus Defined and Anfield Equity

-0.06

Correlation Coefficient

Aptus Defined  Anfield Equity

Good diversification

The 3 months correlation between Aptus and Anfield is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Defined Risk and Anfield Equity Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anfield Equity Sector 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 Anfield Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anfield Equity Sector has no effect on the direction of Aptus Defined i.e., Aptus Defined and Anfield Equity go up and down completely randomly.

Pair Corralation between Aptus Defined and Anfield Equity

Given the investment horizon of 90 days Aptus Defined Risk is expected to generate 0.64 times more return on investment than Anfield Equity. However, Aptus Defined Risk is 1.56 times less risky than Anfield Equity. It trades about 0.12 of its potential returns per unit of risk. Anfield Equity Sector is currently generating about -0.04 per unit of risk. If you would invest  2,762  in Aptus Defined Risk on September 23, 2024 and sell it today you would earn a total of  42.00  from holding Aptus Defined Risk or generate 1.52% return on investment over 90 days.

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

Aptus Defined Risk  vs.  Anfield Equity Sector

Aptus Defined Risk

Risk-Adjusted Performance

0 of 100

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.

Anfield Equity Sector

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anfield Equity Sector are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Anfield Equity is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Aptus Defined and Anfield Equity

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

The idea behind Aptus Defined Risk and Anfield Equity Sector 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.