Correlation Between ClearShares Ultra and Aptus Drawdown

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

By analyzing existing cross correlation between ClearShares Ultra Short Maturity and Aptus Drawdown Managed, you can compare the effects of market volatilities on ClearShares Ultra and Aptus Drawdown 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 ClearShares Ultra with a short position of Aptus Drawdown. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearShares Ultra and Aptus Drawdown.

Diversification Opportunities for ClearShares Ultra and Aptus Drawdown

0.83

Correlation Coefficient

ClearShares Ultra  Aptus Drawdown

Very poor diversification

The 3 months correlation between ClearShares and Aptus is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ClearShares Ultra Short Maturi and Aptus Drawdown Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptus Drawdown Managed and ClearShares Ultra 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 ClearShares Ultra Short Maturity are associated (or correlated) with Aptus Drawdown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptus Drawdown Managed has no effect on the direction of ClearShares Ultra i.e., ClearShares Ultra and Aptus Drawdown go up and down completely randomly.

Pair Corralation between ClearShares Ultra and Aptus Drawdown

Given the investment horizon of 90 days ClearShares Ultra is expected to generate 2.69 times less return on investment than Aptus Drawdown. But when comparing it to its historical volatility, ClearShares Ultra Short Maturity is 39.33 times less risky than Aptus Drawdown. It trades about 1.06 of its potential returns per unit of risk. Aptus Drawdown Managed is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,590  in Aptus Drawdown Managed on September 25, 2024 and sell it today you would earn a total of  136.00  from holding Aptus Drawdown Managed or generate 2.96% return on investment over 90 days.

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

ClearShares Ultra Short Maturi  vs.  Aptus Drawdown Managed

ClearShares Ultra Short

Risk-Adjusted Performance

83 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in ClearShares Ultra Short Maturity are ranked lower than 83 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, ClearShares Ultra is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Aptus Drawdown Managed

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aptus Drawdown Managed are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Aptus Drawdown is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ClearShares Ultra and Aptus Drawdown

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

The idea behind ClearShares Ultra Short Maturity and Aptus Drawdown Managed 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.