Correlation Between Amplify ETF and ERShares Entrepreneurs

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

Diversification Opportunities for Amplify ETF and ERShares Entrepreneurs

0.74

Correlation Coefficient

Amplify ETF  ERShares Entrepreneurs

Poor diversification

The 3 months correlation between Amplify and ERShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amplify ETF Trust and ERShares Entrepreneurs ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ERShares Entrepreneurs 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 ERShares Entrepreneurs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ERShares Entrepreneurs has no effect on the direction of Amplify ETF i.e., Amplify ETF and ERShares Entrepreneurs go up and down completely randomly.

Pair Corralation between Amplify ETF and ERShares Entrepreneurs

Given the investment horizon of 90 days Amplify ETF Trust is expected to under-perform the ERShares Entrepreneurs. But the etf apears to be less risky and, when comparing its historical volatility, Amplify ETF Trust is 1.04 times less risky than ERShares Entrepreneurs. The etf trades about -0.25 of its potential returns per unit of risk. The ERShares Entrepreneurs ETF is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  1,903  in ERShares Entrepreneurs ETF on October 15, 2024 and sell it today you would lose (66.00) from holding ERShares Entrepreneurs ETF or give up 3.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	55.56%
Values	Daily Returns

Amplify ETF Trust  vs.  ERShares Entrepreneurs ETF

Amplify ETF Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify ETF Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Amplify ETF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ERShares Entrepreneurs

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days ERShares Entrepreneurs ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively unfluctuating basic indicators, ERShares Entrepreneurs reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amplify ETF and ERShares Entrepreneurs

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

The idea behind Amplify ETF Trust and ERShares Entrepreneurs ETF 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.