Correlation Between Aptus Defined and Collaborative Investment

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Can any of the company-specific risk be diversified away by investing in both Aptus Defined and Collaborative Investment 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 Collaborative Investment 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 Collaborative Investment Series, you can compare the effects of market volatilities on Aptus Defined and Collaborative Investment 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 Collaborative Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptus Defined and Collaborative Investment.

Diversification Opportunities for Aptus Defined and Collaborative Investment

  Correlation Coefficient

Excellent diversification

The 3 months correlation between Aptus and Collaborative is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Defined Risk and Collaborative Investment Serie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collaborative Investment 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 Collaborative Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collaborative Investment has no effect on the direction of Aptus Defined i.e., Aptus Defined and Collaborative Investment go up and down completely randomly.

Pair Corralation between Aptus Defined and Collaborative Investment

Given the investment horizon of 90 days Aptus Defined Risk is expected to generate 1.69 times more return on investment than Collaborative Investment. However, Aptus Defined is 1.69 times more volatile than Collaborative Investment Series. It trades about 0.2 of its potential returns per unit of risk. Collaborative Investment Series is currently generating about 0.06 per unit of risk. If you would invest  2,548  in Aptus Defined Risk on November 24, 2023 and sell it today you would earn a total of  57.00  from holding Aptus Defined Risk or generate 2.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Aptus Defined Risk  vs.  Collaborative Investment Serie

Aptus Defined Risk 

Risk-Adjusted Performance

20 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Aptus Defined Risk are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Aptus Defined may actually be approaching a critical reversion point that can send shares even higher in March 2024.
Collaborative Investment 

Risk-Adjusted Performance

0 of 100

Very Weak
Over the last 90 days Collaborative Investment Series has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Collaborative Investment is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Aptus Defined and Collaborative Investment Volatility Contrast

   Predicted Return Density   

Pair Trading with Aptus Defined and Collaborative Investment

The main advantage of trading using opposite Aptus Defined and Collaborative Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptus Defined position performs unexpectedly, Collaborative Investment 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 Collaborative Investment will offset losses from the drop in Collaborative Investment's long position.
The idea behind Aptus Defined Risk and Collaborative Investment Series 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.
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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