Correlation Between Opus Small and Aptus Collared

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

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

Diversification Opportunities for Opus Small and Aptus Collared

0.88

Correlation Coefficient

Opus Small  Aptus Collared

Very poor diversification

The 3 months correlation between Opus and Aptus is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Opus Small Cap 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 Opus Small 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 Opus Small Cap 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 Opus Small i.e., Opus Small and Aptus Collared go up and down completely randomly.

Pair Corralation between Opus Small and Aptus Collared

Given the investment horizon of 90 days Opus Small Cap is expected to under-perform the Aptus Collared. In addition to that, Opus Small is 1.28 times more volatile than Aptus Collared Income. It trades about -0.08 of its total potential returns per unit of risk. Aptus Collared Income is currently generating about -0.08 per unit of volatility. If you would invest  4,094  in Aptus Collared Income on December 26, 2024 and sell it today you would lose (141.00) from holding Aptus Collared Income or give up 3.44% of portfolio value over 90 days.

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

Opus Small Cap  vs.  Aptus Collared Income

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 fairly stable fundamental indicators, Opus Small is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Aptus Collared Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aptus Collared Income has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Opus Small and Aptus Collared

The main advantage of trading using opposite Opus Small and Aptus Collared positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opus Small 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 Opus Small Cap 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.