Correlation Between Aptus Defined and Opus Small

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

Diversification Opportunities for Aptus Defined and Opus Small

-0.11

Correlation Coefficient

Aptus Defined  Opus Small

Good diversification

The 3 months correlation between Aptus and Opus is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Defined Risk and Opus Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opus Small Cap 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 Opus Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opus Small Cap has no effect on the direction of Aptus Defined i.e., Aptus Defined and Opus Small go up and down completely randomly.

Pair Corralation between Aptus Defined and Opus Small

Given the investment horizon of 90 days Aptus Defined Risk is expected to generate 0.53 times more return on investment than Opus Small. However, Aptus Defined Risk is 1.88 times less risky than Opus Small. It trades about 0.04 of its potential returns per unit of risk. Opus Small Cap is currently generating about -0.19 per unit of risk. If you would invest  2,785  in Aptus Defined Risk on December 5, 2024 and sell it today you would earn a total of  30.00  from holding Aptus Defined Risk or generate 1.08% 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.  Opus Small Cap

Aptus Defined Risk

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aptus Defined Risk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Aptus Defined is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Opus Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Opus Small Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with Aptus Defined and Opus Small

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

The idea behind Aptus Defined Risk and Opus Small Cap 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.