Correlation Between Amplify ETF and Putnam Focused

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

Diversification Opportunities for Amplify ETF and Putnam Focused

0.73

Correlation Coefficient

Amplify ETF  Putnam Focused

Poor diversification

The 3 months correlation between Amplify and Putnam is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Amplify ETF Trust and Putnam Focused Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Focused Large 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 Putnam Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Focused Large has no effect on the direction of Amplify ETF i.e., Amplify ETF and Putnam Focused go up and down completely randomly.

Pair Corralation between Amplify ETF and Putnam Focused

Given the investment horizon of 90 days Amplify ETF Trust is expected to generate 1.86 times more return on investment than Putnam Focused. However, Amplify ETF is 1.86 times more volatile than Putnam Focused Large. It trades about -0.1 of its potential returns per unit of risk. Putnam Focused Large is currently generating about -0.4 per unit of risk. If you would invest  6,102  in Amplify ETF Trust on September 23, 2024 and sell it today you would lose (178.00) from holding Amplify ETF Trust or give up 2.92% of portfolio value over 90 days.

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

Amplify ETF Trust  vs.  Putnam Focused Large

Amplify ETF Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify ETF Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Amplify ETF may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Putnam Focused Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Focused Large has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Putnam Focused is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Amplify ETF and Putnam Focused

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

The idea behind Amplify ETF Trust and Putnam Focused Large 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.