Correlation Between Amplify Online and Financial Select
Can any of the company-specific risk be diversified away by investing in both Amplify Online and Financial Select 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 Amplify Online and Financial Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amplify Online Retail and Financial Select Sector, you can compare the effects of market volatilities on Amplify Online and Financial Select 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 Amplify Online with a short position of Financial Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify Online and Financial Select.
Diversification Opportunities for Amplify Online and Financial Select
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Amplify and Financial is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Amplify Online Retail and Financial Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Select Sector and Amplify Online 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 Amplify Online Retail are associated (or correlated) with Financial Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Select Sector has no effect on the direction of Amplify Online i.e., Amplify Online and Financial Select go up and down completely randomly.
Pair Corralation between Amplify Online and Financial Select
Given the investment horizon of 90 days Amplify Online is expected to generate 1.79 times less return on investment than Financial Select. In addition to that, Amplify Online is 2.04 times more volatile than Financial Select Sector. It trades about 0.02 of its total potential returns per unit of risk. Financial Select Sector is currently generating about 0.09 per unit of volatility. If you would invest 3,514 in Financial Select Sector on January 20, 2024 and sell it today you would earn a total of 469.00 from holding Financial Select Sector or generate 13.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
Amplify Online Retail vs. Financial Select Sector
Performance |
| Timeline |
| Amplify Online Retail |
| Financial Select Sector |
Amplify Online and Financial Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amplify Online and Financial Select
The main advantage of trading using opposite Amplify Online and Financial Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amplify Online position performs unexpectedly, Financial Select 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 Financial Select will offset losses from the drop in Financial Select's long position.| Amplify Online vs. Consumer Staples Select | Amplify Online vs. Industrial Select Sector | Amplify Online vs. Materials Select Sector | Amplify Online vs. Health Care Select |
| Financial Select vs. Energy Select Sector | Financial Select vs. Technology Select Sector | Financial Select vs. Health Care Select | Financial Select vs. Industrial Select Sector |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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