Correlation Between Aptus Defined and EA Series

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

Diversification Opportunities for Aptus Defined and EA Series

0.44

Correlation Coefficient

Aptus Defined  EA Series

Very weak diversification

The 3 months correlation between Aptus and DRAI is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Aptus Defined Risk and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust 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 EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Aptus Defined i.e., Aptus Defined and EA Series go up and down completely randomly.

Pair Corralation between Aptus Defined and EA Series

Given the investment horizon of 90 days Aptus Defined Risk is expected to under-perform the EA Series. But the etf apears to be less risky and, when comparing its historical volatility, Aptus Defined Risk is 2.19 times less risky than EA Series. The etf trades about -0.02 of its potential returns per unit of risk. The EA Series Trust is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,356  in EA Series Trust on September 14, 2024 and sell it today you would earn a total of  112.00  from holding EA Series Trust or generate 4.75% return on investment over 90 days.

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

Aptus Defined Risk  vs.  EA Series Trust

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.

EA Series Trust

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Aptus Defined and EA Series

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

The idea behind Aptus Defined Risk and EA Series Trust 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.