Correlation Between Amplify ETF and FlexShares International

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

Diversification Opportunities for Amplify ETF and FlexShares International

-0.12

Correlation Coefficient

Amplify ETF  FlexShares International

Good diversification

The 3 months correlation between Amplify and FlexShares is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Amplify ETF Trust and FlexShares International Quali in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares International 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 FlexShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares International has no effect on the direction of Amplify ETF i.e., Amplify ETF and FlexShares International go up and down completely randomly.

Pair Corralation between Amplify ETF and FlexShares International

Given the investment horizon of 90 days Amplify ETF Trust is expected to under-perform the FlexShares International. In addition to that, Amplify ETF is 1.7 times more volatile than FlexShares International Quality. It trades about -0.04 of its total potential returns per unit of risk. FlexShares International Quality is currently generating about 0.12 per unit of volatility. If you would invest  2,753  in FlexShares International Quality on December 30, 2024 and sell it today you would earn a total of  174.00  from holding FlexShares International Quality or generate 6.32% return on investment over 90 days.

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

Amplify ETF Trust  vs.  FlexShares International Quali

Amplify ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amplify ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Amplify ETF is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

FlexShares International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares International Quality are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, FlexShares International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Amplify ETF and FlexShares International

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

The idea behind Amplify ETF Trust and FlexShares International Quality 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.