Correlation Between Cambria Tail and Aptus Drawdown
Can any of the company-specific risk be diversified away by investing in both Cambria Tail 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 Cambria Tail and Aptus Drawdown into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambria Tail Risk and Aptus Drawdown Managed, you can compare the effects of market volatilities on Cambria Tail 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 Cambria Tail with a short position of Aptus Drawdown. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Tail and Aptus Drawdown.
Diversification Opportunities for Cambria Tail and Aptus Drawdown
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cambria and Aptus is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Tail Risk 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 Cambria Tail 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 Cambria Tail Risk 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 Cambria Tail i.e., Cambria Tail and Aptus Drawdown go up and down completely randomly.
Pair Corralation between Cambria Tail and Aptus Drawdown
Given the investment horizon of 90 days Cambria Tail Risk is expected to under-perform the Aptus Drawdown. In addition to that, Cambria Tail is 1.05 times more volatile than Aptus Drawdown Managed. It trades about -0.12 of its total potential returns per unit of risk. Aptus Drawdown Managed is currently generating about 0.13 per unit of volatility. If you would invest 4,666 in Aptus Drawdown Managed on August 27, 2024 and sell it today you would earn a total of 96.00 from holding Aptus Drawdown Managed or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambria Tail Risk vs. Aptus Drawdown Managed
Performance |
| Timeline |
| Cambria Tail Risk |
| Aptus Drawdown Managed |
Cambria Tail and Aptus Drawdown Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambria Tail and Aptus Drawdown
The main advantage of trading using opposite Cambria Tail and Aptus Drawdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria Tail 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.| Cambria Tail vs. Amplify BlackSwan Growth | Cambria Tail vs. AGFiQ Market Neutral | Cambria Tail vs. Quadratic Interest Rate | Cambria Tail vs. AdvisorShares Dorsey Wright |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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