Correlation Between Roundhill Investments and Aptus Drawdown
Can any of the company-specific risk be diversified away by investing in both Roundhill Investments 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 Roundhill Investments and Aptus Drawdown into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roundhill Investments and Aptus Drawdown Managed, you can compare the effects of market volatilities on Roundhill Investments 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 Roundhill Investments with a short position of Aptus Drawdown. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roundhill Investments and Aptus Drawdown.
Diversification Opportunities for Roundhill Investments and Aptus Drawdown
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Roundhill and Aptus is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Investments 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 Roundhill Investments 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 Roundhill Investments 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 Roundhill Investments i.e., Roundhill Investments and Aptus Drawdown go up and down completely randomly.
Pair Corralation between Roundhill Investments and Aptus Drawdown
Given the investment horizon of 90 days Roundhill Investments is expected to generate 3.88 times more return on investment than Aptus Drawdown. However, Roundhill Investments is 3.88 times more volatile than Aptus Drawdown Managed. It trades about 0.09 of its potential returns per unit of risk. Aptus Drawdown Managed is currently generating about 0.11 per unit of risk. If you would invest 2,954 in Roundhill Investments on August 27, 2024 and sell it today you would earn a total of 1,112 from holding Roundhill Investments or generate 37.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 31.85% |
| Values | Daily Returns |
Roundhill Investments vs. Aptus Drawdown Managed
Performance |
| Timeline |
| Roundhill Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Aptus Drawdown Managed |
Roundhill Investments and Aptus Drawdown Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roundhill Investments and Aptus Drawdown
The main advantage of trading using opposite Roundhill Investments and Aptus Drawdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Investments 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.| Roundhill Investments vs. SoFi Social 50 | Roundhill Investments vs. Global X Blockchain | Roundhill Investments vs. Tuttle Capital Short |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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