Correlation Between EA Series and Aptus Defined

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

By analyzing existing cross correlation between EA Series Trust and Aptus Defined Risk, you can compare the effects of market volatilities on EA Series and Aptus Defined 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 EA Series with a short position of Aptus Defined. Check out your portfolio center. Please also check ongoing floating volatility patterns of EA Series and Aptus Defined.

Diversification Opportunities for EA Series and Aptus Defined

0.6

Correlation Coefficient

EA Series  Aptus Defined

Poor diversification

The 3 months correlation between DRAI and Aptus is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and Aptus Defined Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptus Defined Risk and EA Series 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 EA Series Trust are associated (or correlated) with Aptus Defined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptus Defined Risk has no effect on the direction of EA Series i.e., EA Series and Aptus Defined go up and down completely randomly.

Pair Corralation between EA Series and Aptus Defined

Given the investment horizon of 90 days EA Series Trust is expected to under-perform the Aptus Defined. In addition to that, EA Series is 2.31 times more volatile than Aptus Defined Risk. It trades about -0.03 of its total potential returns per unit of risk. Aptus Defined Risk is currently generating about -0.03 per unit of volatility. If you would invest  2,830  in Aptus Defined Risk on September 28, 2024 and sell it today you would lose (31.00) from holding Aptus Defined Risk or give up 1.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

EA Series Trust  vs.  Aptus Defined Risk

EA Series Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EA Series Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, EA Series is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Aptus Defined Risk

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with EA Series and Aptus Defined

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

The idea behind EA Series Trust and Aptus Defined Risk 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.