Correlation Between Swan Hedged and Amplify BlackSwan

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

By analyzing existing cross correlation between Swan Hedged Equity and Amplify BlackSwan Growth, you can compare the effects of market volatilities on Swan Hedged and Amplify BlackSwan 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 Swan Hedged with a short position of Amplify BlackSwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Hedged and Amplify BlackSwan.

Diversification Opportunities for Swan Hedged and Amplify BlackSwan

0.66

Correlation Coefficient

Swan Hedged  Amplify BlackSwan

Poor diversification

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

Pair Corralation between Swan Hedged and Amplify BlackSwan

Given the investment horizon of 90 days Swan Hedged Equity is expected to generate 0.53 times more return on investment than Amplify BlackSwan. However, Swan Hedged Equity is 1.9 times less risky than Amplify BlackSwan. It trades about -0.07 of its potential returns per unit of risk. Amplify BlackSwan Growth is currently generating about -0.05 per unit of risk. If you would invest  2,273  in Swan Hedged Equity on September 22, 2024 and sell it today you would lose (15.00) from holding Swan Hedged Equity or give up 0.66% of portfolio value over 90 days.

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

Swan Hedged Equity  vs.  Amplify BlackSwan Growth

Swan Hedged Equity

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Swan Hedged Equity are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Swan Hedged is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Amplify BlackSwan Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amplify BlackSwan Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Amplify BlackSwan is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Swan Hedged and Amplify BlackSwan

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

The idea behind Swan Hedged Equity and Amplify BlackSwan Growth 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.