Correlation Between Vanguard Mid and Aptus Defined

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

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

Diversification Opportunities for Vanguard Mid and Aptus Defined

0.09

Correlation Coefficient

Vanguard Mid  Aptus Defined

Significant diversification

The 3 months correlation between Vanguard and Aptus is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Aptus Defined Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptus Defined Risk and Vanguard Mid 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 Vanguard Mid Cap Index are associated (or correlated) with Aptus Defined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptus Defined Risk has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and Aptus Defined go up and down completely randomly.

Pair Corralation between Vanguard Mid and Aptus Defined

Allowing for the 90-day total investment horizon Vanguard Mid Cap Index is expected to under-perform the Aptus Defined. In addition to that, Vanguard Mid is 2.16 times more volatile than Aptus Defined Risk. It trades about -0.03 of its total potential returns per unit of risk. Aptus Defined Risk is currently generating about 0.04 per unit of volatility. If you would invest  2,768  in Aptus Defined Risk on December 21, 2024 and sell it today you would earn a total of  27.00  from holding Aptus Defined Risk or generate 0.98% return on investment over 90 days.

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

Vanguard Mid Cap Index  vs.  Aptus Defined Risk

Vanguard Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Mid Cap Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vanguard Mid is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Vanguard Mid and Aptus Defined

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

The idea behind Vanguard Mid Cap Index and Aptus Defined Risk 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.