Correlation Between Amplify ETF and WisdomTree Europe

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

Diversification Opportunities for Amplify ETF and WisdomTree Europe

-0.55

Correlation Coefficient

Amplify ETF  WisdomTree Europe

Excellent diversification

The 3 months correlation between Amplify and WisdomTree is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Amplify ETF Trust and WisdomTree Europe Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Europe Quality 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 WisdomTree Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Europe Quality has no effect on the direction of Amplify ETF i.e., Amplify ETF and WisdomTree Europe go up and down completely randomly.

Pair Corralation between Amplify ETF and WisdomTree Europe

Given the investment horizon of 90 days Amplify ETF Trust is expected to under-perform the WisdomTree Europe. In addition to that, Amplify ETF is 1.2 times more volatile than WisdomTree Europe Quality. It trades about -0.12 of its total potential returns per unit of risk. WisdomTree Europe Quality is currently generating about 0.21 per unit of volatility. If you would invest  2,995  in WisdomTree Europe Quality on December 22, 2024 and sell it today you would earn a total of  344.00  from holding WisdomTree Europe Quality or generate 11.49% return on investment over 90 days.

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

Amplify ETF Trust  vs.  WisdomTree Europe Quality

Amplify ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amplify ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

WisdomTree Europe Quality

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Europe Quality are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, WisdomTree Europe may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Amplify ETF and WisdomTree Europe

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

The idea behind Amplify ETF Trust and WisdomTree Europe Quality 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.