Correlation Between Aptus Collared and FT Cboe

Can any of the company-specific risk be diversified away by investing in both Aptus Collared and FT Cboe 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 Collared and FT Cboe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aptus Collared Income and FT Cboe Vest, you can compare the effects of market volatilities on Aptus Collared and FT Cboe 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 Collared with a short position of FT Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptus Collared and FT Cboe.

Diversification Opportunities for Aptus Collared and FT Cboe

0.96

Correlation Coefficient

Aptus Collared  FT Cboe

Almost no diversification

The 3 months correlation between Aptus and DFEB is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Collared Income and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest and Aptus Collared 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 Collared Income are associated (or correlated) with FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of Aptus Collared i.e., Aptus Collared and FT Cboe go up and down completely randomly.

Pair Corralation between Aptus Collared and FT Cboe

Given the investment horizon of 90 days Aptus Collared Income is expected to generate 1.51 times more return on investment than FT Cboe. However, Aptus Collared is 1.51 times more volatile than FT Cboe Vest. It trades about 0.14 of its potential returns per unit of risk. FT Cboe Vest is currently generating about 0.14 per unit of risk. If you would invest  3,545  in Aptus Collared Income on March 14, 2024 and sell it today you would earn a total of  158.00  from holding Aptus Collared Income or generate 4.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Aptus Collared Income  vs.  FT Cboe Vest

Aptus Collared Income

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aptus Collared Income are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Aptus Collared is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

FT Cboe Vest

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, FT Cboe is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aptus Collared and FT Cboe

The main advantage of trading using opposite Aptus Collared and FT Cboe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptus Collared position performs unexpectedly, FT Cboe 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 FT Cboe will offset losses from the drop in FT Cboe's long position.

The idea behind Aptus Collared Income and FT Cboe Vest 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.