Correlation Between Amplify ETF and IShares ESG

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

Diversification Opportunities for Amplify ETF and IShares ESG

0.63

Correlation Coefficient

Amplify ETF  IShares ESG

Poor diversification

The 3 months correlation between Amplify and IShares is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Amplify ETF Trust and iShares ESG MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG MSCI 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 IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG MSCI has no effect on the direction of Amplify ETF i.e., Amplify ETF and IShares ESG go up and down completely randomly.

Pair Corralation between Amplify ETF and IShares ESG

Given the investment horizon of 90 days Amplify ETF Trust is expected to generate 2.21 times more return on investment than IShares ESG. However, Amplify ETF is 2.21 times more volatile than iShares ESG MSCI. It trades about 0.09 of its potential returns per unit of risk. iShares ESG MSCI is currently generating about 0.09 per unit of risk. If you would invest  4,580  in Amplify ETF Trust on September 25, 2024 and sell it today you would earn a total of  1,344  from holding Amplify ETF Trust or generate 29.34% return on investment over 90 days.

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

Amplify ETF Trust  vs.  iShares ESG MSCI

Amplify ETF Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify ETF Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Amplify ETF showed solid returns over the last few months and may actually be approaching a breakup point.

iShares ESG MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares ESG MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, IShares ESG is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Amplify ETF and IShares ESG

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

The idea behind Amplify ETF Trust and iShares ESG MSCI 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.