Correlation Between Aptus Defined and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Aptus Defined and Northern Lights 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 Northern Lights 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 Northern Lights, you can compare the effects of market volatilities on Aptus Defined and Northern Lights 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 Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptus Defined and Northern Lights.
Diversification Opportunities for Aptus Defined and Northern Lights
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aptus and Northern is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Defined Risk and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights 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 Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of Aptus Defined i.e., Aptus Defined and Northern Lights go up and down completely randomly.
Pair Corralation between Aptus Defined and Northern Lights
Given the investment horizon of 90 days Aptus Defined Risk is expected to generate 0.38 times more return on investment than Northern Lights. However, Aptus Defined Risk is 2.6 times less risky than Northern Lights. It trades about 0.01 of its potential returns per unit of risk. Northern Lights is currently generating about -0.19 per unit of risk. If you would invest 2,780 in Aptus Defined Risk on December 23, 2024 and sell it today you would earn a total of 3.00 from holding Aptus Defined Risk or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptus Defined Risk vs. Northern Lights
Performance |
| Timeline |
| Aptus Defined Risk |
| Northern Lights |
Aptus Defined and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptus Defined and Northern Lights
The main advantage of trading using opposite Aptus Defined and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptus Defined position performs unexpectedly, Northern Lights 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 Northern Lights will offset losses from the drop in Northern Lights' 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 |
| Northern Lights vs. Davis Select International | Northern Lights vs. Tidal ETF Trust | Northern Lights vs. Principal Value ETF | Northern Lights vs. WisdomTree Emerging Markets |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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