Correlation Between Global X and Aptus Collared

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

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

Diversification Opportunities for Global X and Aptus Collared

0.35

Correlation Coefficient

Global X  Aptus Collared

Weak diversification

The 3 months correlation between Global and Aptus is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Global X NASDAQ 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 Global X 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 Global X NASDAQ 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 Global X i.e., Global X and Aptus Collared go up and down completely randomly.

Pair Corralation between Global X and Aptus Collared

Given the investment horizon of 90 days Global X is expected to generate 1.74 times less return on investment than Aptus Collared. But when comparing it to its historical volatility, Global X NASDAQ is 1.31 times less risky than Aptus Collared. It trades about 0.1 of its potential returns per unit of risk. Aptus Collared Income is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,119  in Aptus Collared Income on October 4, 2024 and sell it today you would earn a total of  905.00  from holding Aptus Collared Income or generate 29.02% return on investment over 90 days.

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

Global X NASDAQ  vs.  Aptus Collared Income

Global X NASDAQ

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X NASDAQ are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong primary indicators, Global X is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Aptus Collared Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aptus Collared Income are ranked lower than 2 (%) 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 current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Global X and Aptus Collared

The main advantage of trading using opposite Global X and Aptus Collared positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X NASDAQ 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.