Correlation Between Aptus Defined and ETF Series
Can any of the company-specific risk be diversified away by investing in both Aptus Defined and ETF Series 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 ETF Series 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 ETF Series Solutions, you can compare the effects of market volatilities on Aptus Defined and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptus Defined and ETF Series.
Diversification Opportunities for Aptus Defined and ETF Series
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aptus and ETF is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Defined Risk and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Aptus Defined i.e., Aptus Defined and ETF Series go up and down completely randomly.
Pair Corralation between Aptus Defined and ETF Series
Given the investment horizon of 90 days Aptus Defined is expected to generate 1.83 times less return on investment than ETF Series. But when comparing it to its historical volatility, Aptus Defined Risk is 2.01 times less risky than ETF Series. It trades about 0.12 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,127 in ETF Series Solutions on August 29, 2024 and sell it today you would earn a total of 354.00 from holding ETF Series Solutions or generate 11.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptus Defined Risk vs. ETF Series Solutions
Performance |
| Timeline |
| Aptus Defined Risk |
| ETF Series Solutions |
Aptus Defined and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptus Defined and ETF Series
The main advantage of trading using opposite Aptus Defined and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptus Defined position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' 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 |
| ETF Series vs. Alpha Architect Quantitative | ETF Series vs. Alpha Architect International | ETF Series vs. Alpha Architect International | ETF Series 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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