Correlation Between IShares Morningstar and Amplify High

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

By analyzing existing cross correlation between iShares Morningstar Multi Asset and Amplify High Income, you can compare the effects of market volatilities on IShares Morningstar and Amplify High 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 IShares Morningstar with a short position of Amplify High. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Morningstar and Amplify High.

Diversification Opportunities for IShares Morningstar and Amplify High

0.69

Correlation Coefficient

IShares Morningstar  Amplify High

Poor diversification

The 3 months correlation between IShares and Amplify is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding iShares Morningstar Multi Asse and Amplify High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify High Income and IShares Morningstar 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 iShares Morningstar Multi Asset are associated (or correlated) with Amplify High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify High Income has no effect on the direction of IShares Morningstar i.e., IShares Morningstar and Amplify High go up and down completely randomly.

Pair Corralation between IShares Morningstar and Amplify High

Given the investment horizon of 90 days iShares Morningstar Multi Asset is expected to generate 0.63 times more return on investment than Amplify High. However, iShares Morningstar Multi Asset is 1.58 times less risky than Amplify High. It trades about 0.23 of its potential returns per unit of risk. Amplify High Income is currently generating about 0.09 per unit of risk. If you would invest  1,944  in iShares Morningstar Multi Asset on December 20, 2024 and sell it today you would earn a total of  87.00  from holding iShares Morningstar Multi Asset or generate 4.48% return on investment over 90 days.

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

iShares Morningstar Multi Asse  vs.  Amplify High Income

iShares Morningstar

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Morningstar Multi Asset are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, IShares Morningstar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Amplify High Income

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify High Income are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Amplify High is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Morningstar and Amplify High

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

The idea behind iShares Morningstar Multi Asset and Amplify High Income 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.