Correlation Between Ford and Amplify International
Can any of the company-specific risk be diversified away by investing in both Ford and Amplify International 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 Ford and Amplify International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Amplify International Enhanced, you can compare the effects of market volatilities on Ford and Amplify International 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 Ford with a short position of Amplify International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Amplify International.
Diversification Opportunities for Ford and Amplify International
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Amplify is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Amplify International Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify International and Ford 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 Ford Motor are associated (or correlated) with Amplify International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify International has no effect on the direction of Ford i.e., Ford and Amplify International go up and down completely randomly.
Pair Corralation between Ford and Amplify International
Taking into account the 90-day investment horizon Ford is expected to generate 1.23 times less return on investment than Amplify International. In addition to that, Ford is 2.8 times more volatile than Amplify International Enhanced. It trades about 0.02 of its total potential returns per unit of risk. Amplify International Enhanced is currently generating about 0.08 per unit of volatility. If you would invest 2,655 in Amplify International Enhanced on September 4, 2024 and sell it today you would earn a total of 426.00 from holding Amplify International Enhanced or generate 16.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Amplify International Enhanced
Performance |
| Timeline |
| Ford Motor |
| Amplify International |
Ford and Amplify International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Amplify International
The main advantage of trading using opposite Ford and Amplify International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Amplify International 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 International will offset losses from the drop in Amplify International's long position.The idea behind Ford Motor and Amplify International Enhanced 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.| Amplify International vs. Amplify ETF Trust | Amplify International vs. Amplify CWP Enhanced | Amplify International vs. Schwab International Dividend | Amplify International vs. iShares Trust |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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