Correlation Between Dow Jones and Amplify
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Amplify 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 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, you can compare the effects of market volatilities on Dow Jones and Amplify 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Amplify.
Diversification Opportunities for Dow Jones and Amplify
Modest diversification
The 3 months correlation between Dow and Amplify is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Amplify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify has no effect on the direction of Dow Jones i.e., Dow Jones and Amplify go up and down completely randomly.
Pair Corralation between Dow Jones and Amplify
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.01 times more return on investment than Amplify. However, Dow Jones Industrial is 67.22 times less risky than Amplify. It trades about 0.2 of its potential returns per unit of risk. Amplify is currently generating about -0.5 per unit of risk. If you would invest 4,093,693 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 397,372 from holding Dow Jones Industrial or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 6.25% |
| Values | Daily Returns |
Dow Jones Industrial vs. Amplify
Performance |
| Timeline |
Dow Jones and Amplify Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Dow Jones and Amplify
The main advantage of trading using opposite Dow Jones and Amplify positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Amplify 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 will offset losses from the drop in Amplify's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| Amplify vs. Schwab Fundamental Large | Amplify vs. Schwab Fundamental International | Amplify vs. Schwab Fundamental International | Amplify vs. Schwab Fundamental Emerging |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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