Correlation Between HP and Aptus Drawdown
Can any of the company-specific risk be diversified away by investing in both HP and Aptus Drawdown 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 HP and Aptus Drawdown into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Aptus Drawdown Managed, you can compare the effects of market volatilities on HP and Aptus Drawdown 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 HP with a short position of Aptus Drawdown. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Aptus Drawdown.
Diversification Opportunities for HP and Aptus Drawdown
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HP and Aptus is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Aptus Drawdown Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptus Drawdown Managed and HP 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 HP Inc are associated (or correlated) with Aptus Drawdown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptus Drawdown Managed has no effect on the direction of HP i.e., HP and Aptus Drawdown go up and down completely randomly.
Pair Corralation between HP and Aptus Drawdown
Considering the 90-day investment horizon HP Inc is expected to generate 2.22 times more return on investment than Aptus Drawdown. However, HP is 2.22 times more volatile than Aptus Drawdown Managed. It trades about 0.08 of its potential returns per unit of risk. Aptus Drawdown Managed is currently generating about 0.1 per unit of risk. If you would invest 3,537 in HP Inc on August 23, 2024 and sell it today you would earn a total of 254.00 from holding HP Inc or generate 7.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. Aptus Drawdown Managed
Performance |
| Timeline |
| HP Inc |
| Aptus Drawdown Managed |
HP and Aptus Drawdown Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Aptus Drawdown
The main advantage of trading using opposite HP and Aptus Drawdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Aptus Drawdown 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 Drawdown will offset losses from the drop in Aptus Drawdown's long position.The idea behind HP Inc and Aptus Drawdown Managed 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.| Aptus Drawdown vs. Aptus Collared Income | Aptus Drawdown vs. Aptus Defined Risk | Aptus Drawdown vs. Anfield Equity Sector | Aptus Drawdown vs. Opus Small Cap |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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