Correlation Between Amplify CWP and NEOS Nasdaq

Can any of the company-specific risk be diversified away by investing in both Amplify CWP and NEOS Nasdaq 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 NEOS Nasdaq 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 NEOS Nasdaq 100, you can compare the effects of market volatilities on Amplify CWP and NEOS Nasdaq 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 NEOS Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify CWP and NEOS Nasdaq.

Diversification Opportunities for Amplify CWP and NEOS Nasdaq

0.66

Correlation Coefficient

Amplify CWP  NEOS Nasdaq

Poor diversification

The 3 months correlation between Amplify and NEOS is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Amplify CWP Enhanced and NEOS Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEOS Nasdaq 100 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 NEOS Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEOS Nasdaq 100 has no effect on the direction of Amplify CWP i.e., Amplify CWP and NEOS Nasdaq go up and down completely randomly.

Pair Corralation between Amplify CWP and NEOS Nasdaq

Given the investment horizon of 90 days Amplify CWP Enhanced is expected to generate 0.64 times more return on investment than NEOS Nasdaq. However, Amplify CWP Enhanced is 1.55 times less risky than NEOS Nasdaq. It trades about 0.01 of its potential returns per unit of risk. NEOS Nasdaq 100 is currently generating about -0.06 per unit of risk. If you would invest  4,013  in Amplify CWP Enhanced on December 28, 2024 and sell it today you would earn a total of  18.00  from holding Amplify CWP Enhanced or generate 0.45% return on investment over 90 days.

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

Amplify CWP Enhanced  vs.  NEOS Nasdaq 100

Amplify CWP Enhanced

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify CWP Enhanced are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Amplify CWP is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

NEOS Nasdaq 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days NEOS Nasdaq 100 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, NEOS Nasdaq 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 CWP and NEOS Nasdaq

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

The idea behind Amplify CWP Enhanced and NEOS Nasdaq 100 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.