Correlation Between ProShares and Amplify Cash

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

By analyzing existing cross correlation between ProShares SP 500 and Amplify Cash Flow, you can compare the effects of market volatilities on ProShares and Amplify Cash 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 ProShares with a short position of Amplify Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Amplify Cash.

Diversification Opportunities for ProShares and Amplify Cash

-0.21

Correlation Coefficient

ProShares  Amplify Cash

Very good diversification

The 3 months correlation between ProShares and Amplify is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and Amplify Cash Flow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify Cash Flow and ProShares 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 ProShares SP 500 are associated (or correlated) with Amplify Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify Cash Flow has no effect on the direction of ProShares i.e., ProShares and Amplify Cash go up and down completely randomly.

Pair Corralation between ProShares and Amplify Cash

Given the investment horizon of 90 days ProShares SP 500 is expected to generate 0.92 times more return on investment than Amplify Cash. However, ProShares SP 500 is 1.08 times less risky than Amplify Cash. It trades about 0.05 of its potential returns per unit of risk. Amplify Cash Flow is currently generating about -0.07 per unit of risk. If you would invest  9,874  in ProShares SP 500 on December 30, 2024 and sell it today you would earn a total of  212.00  from holding ProShares SP 500 or generate 2.15% return on investment over 90 days.

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

ProShares SP 500  vs.  Amplify Cash Flow

ProShares SP 500

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares SP 500 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, ProShares is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Amplify Cash Flow

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amplify Cash Flow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Amplify Cash is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ProShares and Amplify Cash

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

The idea behind ProShares SP 500 and Amplify Cash Flow 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.