Correlation Between Invesco SP and Amplify Online

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

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

Diversification Opportunities for Invesco SP and Amplify Online

0.8

Correlation Coefficient

Invesco SP  Amplify Online

Very poor diversification

The 3 months correlation between Invesco and Amplify is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and Amplify Online Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify Online Retail and Invesco SP 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 Invesco SP 500 are associated (or correlated) with Amplify Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify Online Retail has no effect on the direction of Invesco SP i.e., Invesco SP and Amplify Online go up and down completely randomly.

Pair Corralation between Invesco SP and Amplify Online

Considering the 90-day investment horizon Invesco SP is expected to generate 7.37 times less return on investment than Amplify Online. But when comparing it to its historical volatility, Invesco SP 500 is 1.36 times less risky than Amplify Online. It trades about 0.02 of its potential returns per unit of risk. Amplify Online Retail is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  5,920  in Amplify Online Retail on September 23, 2024 and sell it today you would earn a total of  620.00  from holding Amplify Online Retail or generate 10.47% return on investment over 90 days.

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

Invesco SP 500  vs.  Amplify Online Retail

Invesco SP 500

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP 500 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Invesco SP is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Amplify Online Retail

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify Online Retail are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Amplify Online may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Invesco SP and Amplify Online

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

The idea behind Invesco SP 500 and Amplify Online Retail 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.