Correlation Between ProShares Online and Amplify

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

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

Diversification Opportunities for ProShares Online and Amplify

0.14

Correlation Coefficient

ProShares Online  Amplify

Average diversification

The 3 months correlation between ProShares and Amplify is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Online Retail and Amplify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify and ProShares Online 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 Online Retail are associated (or correlated) with Amplify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify has no effect on the direction of ProShares Online i.e., ProShares Online and Amplify go up and down completely randomly.

Pair Corralation between ProShares Online and Amplify

Given the investment horizon of 90 days ProShares Online Retail is expected to generate 1.1 times more return on investment than Amplify. However, ProShares Online is 1.1 times more volatile than Amplify. It trades about 0.05 of its potential returns per unit of risk. Amplify is currently generating about -0.03 per unit of risk. If you would invest  3,355  in ProShares Online Retail on October 11, 2024 and sell it today you would earn a total of  1,234  from holding ProShares Online Retail or generate 36.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	82.66%
Values	Daily Returns

ProShares Online Retail  vs.  Amplify

ProShares Online Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Online Retail has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, ProShares Online is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Amplify

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ProShares Online and Amplify

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

The idea behind ProShares Online Retail and Amplify 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.