Correlation Between Ford and Amplify Thematic
Can any of the company-specific risk be diversified away by investing in both Ford and Amplify Thematic 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 Thematic 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 Thematic All Stars, you can compare the effects of market volatilities on Ford and Amplify Thematic 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 Thematic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Amplify Thematic.
Diversification Opportunities for Ford and Amplify Thematic
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Amplify is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Amplify Thematic All Stars in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify Thematic All 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 Thematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify Thematic All has no effect on the direction of Ford i.e., Ford and Amplify Thematic go up and down completely randomly.
Pair Corralation between Ford and Amplify Thematic
Taking into account the 90-day investment horizon Ford is expected to generate 2.61 times less return on investment than Amplify Thematic. In addition to that, Ford is 1.96 times more volatile than Amplify Thematic All Stars. It trades about 0.05 of its total potential returns per unit of risk. Amplify Thematic All Stars is currently generating about 0.27 per unit of volatility. If you would invest 2,246 in Amplify Thematic All Stars on August 26, 2024 and sell it today you would earn a total of 187.00 from holding Amplify Thematic All Stars or generate 8.33% 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 Thematic All Stars
Performance |
| Timeline |
| Ford Motor |
| Amplify Thematic All |
Ford and Amplify Thematic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Amplify Thematic
The main advantage of trading using opposite Ford and Amplify Thematic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Amplify Thematic 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 Thematic will offset losses from the drop in Amplify Thematic's long position.The idea behind Ford Motor and Amplify Thematic All Stars 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 Thematic vs. Amplify BlackSwan ISWN | Amplify Thematic vs. Global X Thematic | Amplify Thematic vs. Virtus ETF 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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