Correlation Between Amplify Transformational and ProShares Trust
Can any of the company-specific risk be diversified away by investing in both Amplify Transformational and ProShares Trust 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 Amplify Transformational and ProShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amplify Transformational Data and ProShares Trust, you can compare the effects of market volatilities on Amplify Transformational and ProShares Trust 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 Amplify Transformational with a short position of ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify Transformational and ProShares Trust.
Diversification Opportunities for Amplify Transformational and ProShares Trust
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Amplify and ProShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Amplify Transformational Data and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust and Amplify Transformational 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 Amplify Transformational Data are associated (or correlated) with ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of Amplify Transformational i.e., Amplify Transformational and ProShares Trust go up and down completely randomly.
Pair Corralation between Amplify Transformational and ProShares Trust
Given the investment horizon of 90 days Amplify Transformational is expected to generate 1.64 times less return on investment than ProShares Trust. But when comparing it to its historical volatility, Amplify Transformational Data is 1.45 times less risky than ProShares Trust. It trades about 0.11 of its potential returns per unit of risk. ProShares Trust is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,268 in ProShares Trust on August 26, 2024 and sell it today you would earn a total of 5,973 from holding ProShares Trust or generate 182.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 58.55% |
| Values | Daily Returns |
Amplify Transformational Data vs. ProShares Trust
Performance |
| Timeline |
| Amplify Transformational |
| ProShares Trust |
Amplify Transformational and ProShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amplify Transformational and ProShares Trust
The main advantage of trading using opposite Amplify Transformational and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amplify Transformational position performs unexpectedly, ProShares Trust 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 ProShares Trust will offset losses from the drop in ProShares Trust's long position.The idea behind Amplify Transformational Data and ProShares 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.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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