Correlation Between Diversified United and AMP
Can any of the company-specific risk be diversified away by investing in both Diversified United and AMP 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 Diversified United and AMP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diversified United Investment and AMP, you can compare the effects of market volatilities on Diversified United and AMP 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 Diversified United with a short position of AMP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified United and AMP.
Diversification Opportunities for Diversified United and AMP
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diversified and AMP is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Diversified United Investment and AMP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP and Diversified United 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 Diversified United Investment are associated (or correlated) with AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP has no effect on the direction of Diversified United i.e., Diversified United and AMP go up and down completely randomly.
Pair Corralation between Diversified United and AMP
Assuming the 90 days trading horizon Diversified United is expected to generate 3.83 times less return on investment than AMP. But when comparing it to its historical volatility, Diversified United Investment is 3.0 times less risky than AMP. It trades about 0.23 of its potential returns per unit of risk. AMP is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 145.00 in AMP on September 4, 2024 and sell it today you would earn a total of 13.00 from holding AMP or generate 8.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diversified United Investment vs. AMP
Performance |
| Timeline |
| Diversified United |
| AMP |
Diversified United and AMP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified United and AMP
The main advantage of trading using opposite Diversified United and AMP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified United position performs unexpectedly, AMP 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 AMP will offset losses from the drop in AMP's long position.| Diversified United vs. Australian Foundation Investment | Diversified United vs. GQG Partners DRC | Diversified United vs. MFF Capital Investments | Diversified United vs. Metrics Master Income |
| AMP vs. Macquarie Technology Group | AMP vs. Qbe Insurance Group | AMP vs. Treasury Wine Estates | AMP vs. Land Homes Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |