Correlation Between Cambria Tail and Aptus Collared

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

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

Diversification Opportunities for Cambria Tail and Aptus Collared

-0.9

Correlation Coefficient

Cambria Tail  Aptus Collared

Pay attention - limited upside

The 3 months correlation between Cambria and Aptus is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Tail Risk 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 Cambria Tail 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 Cambria Tail Risk 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 Cambria Tail i.e., Cambria Tail and Aptus Collared go up and down completely randomly.

Pair Corralation between Cambria Tail and Aptus Collared

Given the investment horizon of 90 days Cambria Tail Risk is expected to under-perform the Aptus Collared. In addition to that, Cambria Tail is 1.16 times more volatile than Aptus Collared Income. It trades about -0.19 of its total potential returns per unit of risk. Aptus Collared Income is currently generating about 0.16 per unit of volatility. If you would invest  3,902  in Aptus Collared Income on September 18, 2024 and sell it today you would earn a total of  211.00  from holding Aptus Collared Income or generate 5.41% return on investment over 90 days.

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

Cambria Tail Risk  vs.  Aptus Collared Income

Cambria Tail Risk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambria Tail Risk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Etf's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Aptus Collared Income

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aptus Collared Income are ranked lower than 12 (%) 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 Cambria Tail and Aptus Collared

The main advantage of trading using opposite Cambria Tail and Aptus Collared positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria Tail 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 Cambria Tail Risk 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.