Correlation Between ALPS and Amplify ETF

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

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

Diversification Opportunities for ALPS and Amplify ETF

0.74

Correlation Coefficient

ALPS  Amplify ETF

Poor diversification

The 3 months correlation between ALPS and Amplify is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ALPS and Amplify ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify ETF Trust and ALPS 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 ALPS are associated (or correlated) with Amplify ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify ETF Trust has no effect on the direction of ALPS i.e., ALPS and Amplify ETF go up and down completely randomly.

Pair Corralation between ALPS and Amplify ETF

If you would invest  2,108  in Amplify ETF Trust on September 20, 2024 and sell it today you would earn a total of  15.00  from holding Amplify ETF Trust or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

ALPS  vs.  Amplify ETF Trust

ALPS

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days ALPS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, ALPS showed solid returns over the last few months and may actually be approaching a breakup point.

Amplify ETF Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify ETF Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish basic indicators, Amplify ETF may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ALPS and Amplify ETF

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

The idea behind ALPS and Amplify ETF Trust 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.