Correlation Between Amplify ETF and Invesco SP

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

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

Diversification Opportunities for Amplify ETF and Invesco SP

0.77

Correlation Coefficient

Amplify ETF  Invesco SP

Poor diversification

The 3 months correlation between Amplify and Invesco is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Amplify ETF Trust and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 and Amplify ETF 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 Amplify ETF Trust are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of Amplify ETF i.e., Amplify ETF and Invesco SP go up and down completely randomly.

Pair Corralation between Amplify ETF and Invesco SP

Given the investment horizon of 90 days Amplify ETF is expected to generate 1.21 times less return on investment than Invesco SP. In addition to that, Amplify ETF is 1.39 times more volatile than Invesco SP 500. It trades about 0.05 of its total potential returns per unit of risk. Invesco SP 500 is currently generating about 0.09 per unit of volatility. If you would invest  4,233  in Invesco SP 500 on September 25, 2024 and sell it today you would earn a total of  881.00  from holding Invesco SP 500 or generate 20.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Amplify ETF Trust  vs.  Invesco SP 500

Amplify ETF Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify ETF Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish basic indicators, Amplify ETF may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invesco SP 500

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP 500 are ranked lower than 2 (%) 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 current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Amplify ETF and Invesco SP

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

The idea behind Amplify ETF Trust and Invesco SP 500 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.