Correlation Between Amundi Index and Amundi SP
Can any of the company-specific risk be diversified away by investing in both Amundi Index and Amundi SP 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 Amundi Index and Amundi SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amundi Index Solutions and Amundi SP 500, you can compare the effects of market volatilities on Amundi Index and Amundi SP 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 Amundi Index with a short position of Amundi SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amundi Index and Amundi SP.
Diversification Opportunities for Amundi Index and Amundi SP
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Amundi and Amundi is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Amundi Index Solutions and Amundi SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi SP 500 and Amundi Index 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 Amundi Index Solutions are associated (or correlated) with Amundi SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi SP 500 has no effect on the direction of Amundi Index i.e., Amundi Index and Amundi SP go up and down completely randomly.
Pair Corralation between Amundi Index and Amundi SP
Assuming the 90 days trading horizon Amundi Index is expected to generate 12.19 times less return on investment than Amundi SP. But when comparing it to its historical volatility, Amundi Index Solutions is 1.97 times less risky than Amundi SP. It trades about 0.02 of its potential returns per unit of risk. Amundi SP 500 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 10,642 in Amundi SP 500 on August 26, 2024 and sell it today you would earn a total of 5,883 from holding Amundi SP 500 or generate 55.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amundi Index Solutions vs. Amundi SP 500
Performance |
| Timeline |
| Amundi Index Solutions |
| Amundi SP 500 |
Amundi Index and Amundi SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amundi Index and Amundi SP
The main advantage of trading using opposite Amundi Index and Amundi SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amundi Index position performs unexpectedly, Amundi SP 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 Amundi SP will offset losses from the drop in Amundi SP's long position.The idea behind Amundi Index Solutions and Amundi SP 500 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.| Amundi SP vs. Amundi Index Solutions | Amundi SP vs. Amundi Index Solutions | Amundi SP vs. Amundi Index Solutions | Amundi SP vs. Amundi SP 500 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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