Correlation Between Amplify CWP and Franklin International
Can any of the company-specific risk be diversified away by investing in both Amplify CWP and Franklin 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 Amplify CWP and Franklin International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amplify CWP Enhanced and Franklin International Core, you can compare the effects of market volatilities on Amplify CWP and Franklin 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 Amplify CWP with a short position of Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify CWP and Franklin International.
Diversification Opportunities for Amplify CWP and Franklin International
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amplify and Franklin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Amplify CWP Enhanced and Franklin International Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International and Amplify CWP 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 CWP Enhanced are associated (or correlated) with Franklin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of Amplify CWP i.e., Amplify CWP and Franklin International go up and down completely randomly.
Pair Corralation between Amplify CWP and Franklin International
Given the investment horizon of 90 days Amplify CWP Enhanced is expected to generate 0.57 times more return on investment than Franklin International. However, Amplify CWP Enhanced is 1.75 times less risky than Franklin International. It trades about -0.15 of its potential returns per unit of risk. Franklin International Core is currently generating about -0.12 per unit of risk. If you would invest 3,857 in Amplify CWP Enhanced on January 29, 2024 and sell it today you would lose (53.00) from holding Amplify CWP Enhanced or give up 1.37% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Amplify CWP Enhanced vs. Franklin International Core
Performance |
Timeline |
Amplify CWP Enhanced |
Franklin International |
Amplify CWP and Franklin International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amplify CWP and Franklin International
The main advantage of trading using opposite Amplify CWP and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amplify CWP position performs unexpectedly, Franklin 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 Franklin International will offset losses from the drop in Franklin International's long position.Amplify CWP vs. Nationwide Nasdaq 100 Risk Managed | Amplify CWP vs. Global X SP | Amplify CWP vs. Global X Russell | Amplify CWP vs. JPMorgan Equity Premium |
Franklin International vs. PIMCO RAFI Dynamic | Franklin International vs. PIMCO RAFI Dynamic | Franklin International vs. JPMorgan Diversified Return | Franklin International vs. JPMorgan Diversified Return |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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