Correlation Between Caterpillar and Amplify ETF

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

By analyzing existing cross correlation between Caterpillar and Amplify ETF Trust, you can compare the effects of market volatilities on Caterpillar and Amplify ETF 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 Caterpillar with a short position of Amplify ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Amplify ETF.

Diversification Opportunities for Caterpillar and Amplify ETF

-0.4

Correlation Coefficient

Caterpillar  Amplify ETF

Very good diversification

The 3 months correlation between Caterpillar and Amplify is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Amplify ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify ETF Trust and Caterpillar 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 Caterpillar are associated (or correlated) with Amplify ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify ETF Trust has no effect on the direction of Caterpillar i.e., Caterpillar and Amplify ETF go up and down completely randomly.

Pair Corralation between Caterpillar and Amplify ETF

Considering the 90-day investment horizon Caterpillar is expected to under-perform the Amplify ETF. In addition to that, Caterpillar is 19.26 times more volatile than Amplify ETF Trust. It trades about -0.06 of its total potential returns per unit of risk. Amplify ETF Trust is currently generating about 0.2 per unit of volatility. If you would invest  9,947  in Amplify ETF Trust on October 6, 2024 and sell it today you would earn a total of  81.00  from holding Amplify ETF Trust or generate 0.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Caterpillar  vs.  Amplify ETF Trust

Caterpillar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caterpillar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Amplify ETF Trust

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify ETF Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Amplify ETF is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Caterpillar and Amplify ETF

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

The idea behind Caterpillar and Amplify ETF Trust 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.