Correlation Between Aptus Defined and American Century
Can any of the company-specific risk be diversified away by investing in both Aptus Defined and American Century 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 Defined and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptus Defined Risk and American Century ETF, you can compare the effects of market volatilities on Aptus Defined and American Century 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 Defined with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptus Defined and American Century.
Diversification Opportunities for Aptus Defined and American Century
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aptus and American is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Defined Risk and American Century ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century ETF and Aptus Defined 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 Defined Risk are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century ETF has no effect on the direction of Aptus Defined i.e., Aptus Defined and American Century go up and down completely randomly.
Pair Corralation between Aptus Defined and American Century
Given the investment horizon of 90 days Aptus Defined is expected to generate 4.4 times less return on investment than American Century. But when comparing it to its historical volatility, Aptus Defined Risk is 1.04 times less risky than American Century. It trades about 0.07 of its potential returns per unit of risk. American Century ETF is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 5,690 in American Century ETF on September 13, 2024 and sell it today you would earn a total of 167.99 from holding American Century ETF or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aptus Defined Risk vs. American Century ETF
Performance |
| Timeline |
| Aptus Defined Risk |
| American Century ETF |
Aptus Defined and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptus Defined and American Century
The main advantage of trading using opposite Aptus Defined and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptus Defined position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| Aptus Defined vs. Amplify BlackSwan Growth | Aptus Defined vs. Aptus Collared Income | Aptus Defined vs. Aptus Drawdown Managed | Aptus Defined vs. Cambria Tail Risk |
| American Century vs. First Trust Multi Asset | American Century vs. Collaborative Investment Series | American Century vs. EA Series Trust | American Century vs. Aptus Defined Risk |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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