Correlation Between Dow Jones and Amplify ETF
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Amplify ETF 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 Dow Jones and Amplify ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Amplify ETF Trust, you can compare the effects of market volatilities on Dow Jones and Amplify ETF 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 Dow Jones with a short position of Amplify ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Amplify ETF.
Diversification Opportunities for Dow Jones and Amplify ETF
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Amplify is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Amplify ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify ETF Trust and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Amplify ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify ETF Trust has no effect on the direction of Dow Jones i.e., Dow Jones and Amplify ETF go up and down completely randomly.
Pair Corralation between Dow Jones and Amplify ETF
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.4 times less return on investment than Amplify ETF. But when comparing it to its historical volatility, Dow Jones Industrial is 1.78 times less risky than Amplify ETF. It trades about 0.15 of its potential returns per unit of risk. Amplify ETF Trust is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 5,402 in Amplify ETF Trust on August 24, 2024 and sell it today you would earn a total of 609.00 from holding Amplify ETF Trust or generate 11.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Amplify ETF Trust
Performance |
| Timeline |
Dow Jones and Amplify ETF Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Amplify ETF Trust
Pair trading matchups for Amplify ETF
Pair Trading with Dow Jones and Amplify ETF
The main advantage of trading using opposite Dow Jones and Amplify ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Amplify ETF 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 Amplify ETF will offset losses from the drop in Amplify ETF's long position.| Dow Jones vs. Barrick Gold Corp | Dow Jones vs. Jutal Offshore Oil | Dow Jones vs. Eastern Co | Dow Jones vs. Weyco Group |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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