Correlation Between Us Government and AMPL

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

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

Diversification Opportunities for Us Government and AMPL

-0.22

Correlation Coefficient

Us Government  AMPL

Very good diversification

The 3 months correlation between GVPIX and AMPL is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Plus and AMPL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMPL and Us Government 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 Us Government Plus are associated (or correlated) with AMPL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMPL has no effect on the direction of Us Government i.e., Us Government and AMPL go up and down completely randomly.

Pair Corralation between Us Government and AMPL

Assuming the 90 days horizon Us Government Plus is expected to generate 0.15 times more return on investment than AMPL. However, Us Government Plus is 6.51 times less risky than AMPL. It trades about 0.06 of its potential returns per unit of risk. AMPL is currently generating about -0.01 per unit of risk. If you would invest  3,252  in Us Government Plus on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Us Government Plus or generate 3.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Us Government Plus  vs.  AMPL

Us Government Plus

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Us Government Plus are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Us Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AMPL

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMPL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, AMPL is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Us Government and AMPL

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

The idea behind Us Government Plus and AMPL 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.