Correlation Between Amundi Index and ETC Group

Can any of the company-specific risk be diversified away by investing in both Amundi Index and ETC Group 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 Amundi Index and ETC Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amundi Index Solutions and ETC Group Global, you can compare the effects of market volatilities on Amundi Index and ETC Group 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 Amundi Index with a short position of ETC Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amundi Index and ETC Group.

Diversification Opportunities for Amundi Index and ETC Group

0.12

Correlation Coefficient

Amundi Index  ETC Group

Average diversification

The 3 months correlation between Amundi and ETC is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Amundi Index Solutions and ETC Group Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETC Group Global and Amundi Index 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 Amundi Index Solutions are associated (or correlated) with ETC Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETC Group Global has no effect on the direction of Amundi Index i.e., Amundi Index and ETC Group go up and down completely randomly.

Pair Corralation between Amundi Index and ETC Group

Assuming the 90 days trading horizon Amundi Index Solutions is expected to generate 0.63 times more return on investment than ETC Group. However, Amundi Index Solutions is 1.58 times less risky than ETC Group. It trades about 0.01 of its potential returns per unit of risk. ETC Group Global is currently generating about -0.02 per unit of risk. If you would invest  4,041  in Amundi Index Solutions on December 2, 2024 and sell it today you would lose (1.00) from holding Amundi Index Solutions or give up 0.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Amundi Index Solutions  vs.  ETC Group Global

Amundi Index Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amundi Index Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Amundi Index is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ETC Group Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days ETC Group Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ETC Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Amundi Index and ETC Group

The main advantage of trading using opposite Amundi Index and ETC Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amundi Index position performs unexpectedly, ETC Group 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 ETC Group will offset losses from the drop in ETC Group's long position.

The idea behind Amundi Index Solutions and ETC Group Global 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.