Correlation Between Swan Hedged and Aptus Collared

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

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

Diversification Opportunities for Swan Hedged and Aptus Collared

0.98

Correlation Coefficient

Swan Hedged  Aptus Collared

Almost no diversification

The 3 months correlation between Swan and Aptus is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Swan Hedged Equity and Aptus Collared Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptus Collared Income and Swan Hedged 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 Swan Hedged Equity are associated (or correlated) with Aptus Collared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptus Collared Income has no effect on the direction of Swan Hedged i.e., Swan Hedged and Aptus Collared go up and down completely randomly.

Pair Corralation between Swan Hedged and Aptus Collared

Given the investment horizon of 90 days Swan Hedged Equity is expected to generate 0.78 times more return on investment than Aptus Collared. However, Swan Hedged Equity is 1.28 times less risky than Aptus Collared. It trades about -0.04 of its potential returns per unit of risk. Aptus Collared Income is currently generating about -0.04 per unit of risk. If you would invest  2,275  in Swan Hedged Equity on September 23, 2024 and sell it today you would lose (8.00) from holding Swan Hedged Equity or give up 0.35% of portfolio value over 90 days.

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

Swan Hedged Equity  vs.  Aptus Collared Income

Swan Hedged Equity

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Swan Hedged Equity are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Swan Hedged is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Aptus Collared Income

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aptus Collared Income are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Aptus Collared is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Swan Hedged and Aptus Collared

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

The idea behind Swan Hedged Equity and Aptus Collared Income 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.