Correlation Between Amplify BlackSwan and Amplify CWP

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

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

Diversification Opportunities for Amplify BlackSwan and Amplify CWP

0.01

Correlation Coefficient

Amplify BlackSwan  Amplify CWP

Significant diversification

The 3 months correlation between Amplify and Amplify is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Amplify BlackSwan ISWN and Amplify CWP Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify CWP Enhanced and Amplify BlackSwan 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 BlackSwan ISWN are associated (or correlated) with Amplify CWP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify CWP Enhanced has no effect on the direction of Amplify BlackSwan i.e., Amplify BlackSwan and Amplify CWP go up and down completely randomly.

Pair Corralation between Amplify BlackSwan and Amplify CWP

Given the investment horizon of 90 days Amplify BlackSwan ISWN is expected to under-perform the Amplify CWP. In addition to that, Amplify BlackSwan is 1.3 times more volatile than Amplify CWP Enhanced. It trades about 0.0 of its total potential returns per unit of risk. Amplify CWP Enhanced is currently generating about 0.08 per unit of volatility. If you would invest  3,251  in Amplify CWP Enhanced on October 11, 2024 and sell it today you would earn a total of  814.00  from holding Amplify CWP Enhanced or generate 25.04% return on investment over 90 days.

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

Amplify BlackSwan ISWN  vs.  Amplify CWP Enhanced

Amplify BlackSwan ISWN

Risk-Adjusted Performance

0 of 100

Very Weak

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

Amplify CWP Enhanced

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Amplify BlackSwan and Amplify CWP

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

The idea behind Amplify BlackSwan ISWN and Amplify CWP Enhanced 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.