Correlation Between Amplify CWP and IShares SP

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

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

Diversification Opportunities for Amplify CWP and IShares SP

0.95

Correlation Coefficient

Amplify CWP  IShares SP

Almost no diversification

The 3 months correlation between Amplify and IShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Amplify CWP Enhanced and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 and Amplify CWP 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 CWP Enhanced are associated (or correlated) with IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of Amplify CWP i.e., Amplify CWP and IShares SP go up and down completely randomly.

Pair Corralation between Amplify CWP and IShares SP

Given the investment horizon of 90 days Amplify CWP Enhanced is expected to generate 1.45 times more return on investment than IShares SP. However, Amplify CWP is 1.45 times more volatile than iShares SP 500. It trades about 0.21 of its potential returns per unit of risk. iShares SP 500 is currently generating about 0.24 per unit of risk. If you would invest  3,957  in Amplify CWP Enhanced on September 2, 2024 and sell it today you would earn a total of  327.00  from holding Amplify CWP Enhanced or generate 8.26% return on investment over 90 days.

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

Amplify CWP Enhanced  vs.  iShares SP 500

Amplify CWP Enhanced

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify CWP Enhanced are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Amplify CWP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares SP 500

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SP 500 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, IShares SP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Amplify CWP and IShares SP

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

The idea behind Amplify CWP Enhanced and iShares 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 Stocks Directory module to find actively traded stocks across global markets.