Correlation Between Aptus Drawdown and Innovator Hedged
Can any of the company-specific risk be diversified away by investing in both Aptus Drawdown and Innovator Hedged 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 Aptus Drawdown and Innovator Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptus Drawdown Managed and Innovator Hedged Nasdaq 100, you can compare the effects of market volatilities on Aptus Drawdown and Innovator Hedged 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 Aptus Drawdown with a short position of Innovator Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptus Drawdown and Innovator Hedged.
Diversification Opportunities for Aptus Drawdown and Innovator Hedged
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aptus and Innovator is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Drawdown Managed and Innovator Hedged Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Hedged Nasdaq and Aptus Drawdown 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 Aptus Drawdown Managed are associated (or correlated) with Innovator Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Hedged Nasdaq has no effect on the direction of Aptus Drawdown i.e., Aptus Drawdown and Innovator Hedged go up and down completely randomly.
Pair Corralation between Aptus Drawdown and Innovator Hedged
Given the investment horizon of 90 days Aptus Drawdown Managed is expected to generate 1.04 times more return on investment than Innovator Hedged. However, Aptus Drawdown is 1.04 times more volatile than Innovator Hedged Nasdaq 100. It trades about 0.13 of its potential returns per unit of risk. Innovator Hedged Nasdaq 100 is currently generating about 0.08 per unit of risk. If you would invest 4,672 in Aptus Drawdown Managed on August 30, 2024 and sell it today you would earn a total of 96.00 from holding Aptus Drawdown Managed or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptus Drawdown Managed vs. Innovator Hedged Nasdaq 100
Performance |
| Timeline |
| Aptus Drawdown Managed |
| Innovator Hedged Nasdaq |
Aptus Drawdown and Innovator Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptus Drawdown and Innovator Hedged
The main advantage of trading using opposite Aptus Drawdown and Innovator Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptus Drawdown position performs unexpectedly, Innovator Hedged 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 Innovator Hedged will offset losses from the drop in Innovator Hedged's long position.| Aptus Drawdown vs. Aptus Collared Income | Aptus Drawdown vs. Aptus Defined Risk | Aptus Drawdown vs. Anfield Equity Sector | Aptus Drawdown vs. Opus Small Cap |
| Innovator Hedged vs. Alpha Architect Quantitative | Innovator Hedged vs. Alpha Architect International | Innovator Hedged vs. Alpha Architect International | Innovator Hedged vs. Alpha Architect Quantitative |
Check out your portfolio center.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.
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