Correlation Between Aptus Defined and IShares Core

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

Diversification Opportunities for Aptus Defined and IShares Core

0.8

Correlation Coefficient

Aptus Defined  IShares Core

Very poor diversification

The 3 months correlation between Aptus and IShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Defined Risk and iShares Core Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Moderate 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Moderate has no effect on the direction of Aptus Defined i.e., Aptus Defined and IShares Core go up and down completely randomly.

Pair Corralation between Aptus Defined and IShares Core

Given the investment horizon of 90 days Aptus Defined is expected to generate 3.36 times less return on investment than IShares Core. In addition to that, Aptus Defined is 1.13 times more volatile than iShares Core Moderate. It trades about 0.03 of its total potential returns per unit of risk. iShares Core Moderate is currently generating about 0.11 per unit of volatility. If you would invest  4,380  in iShares Core Moderate on September 3, 2024 and sell it today you would earn a total of  107.00  from holding iShares Core Moderate or generate 2.44% return on investment over 90 days.

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

Aptus Defined Risk  vs.  iShares Core Moderate

Aptus Defined Risk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aptus Defined Risk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

iShares Core Moderate

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Moderate are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aptus Defined and IShares Core

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

The idea behind Aptus Defined Risk and iShares Core Moderate 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 Commodity Directory module to find actively traded commodities issued by global exchanges.