Correlation Between FT Cboe and Amplify CWP

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

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

Diversification Opportunities for FT Cboe and Amplify CWP

0.74

Correlation Coefficient

FT Cboe  Amplify CWP

Poor diversification

The 3 months correlation between KNG and Amplify is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest 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 FT Cboe 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 FT Cboe Vest 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 FT Cboe i.e., FT Cboe and Amplify CWP go up and down completely randomly.

Pair Corralation between FT Cboe and Amplify CWP

Considering the 90-day investment horizon FT Cboe is expected to generate 6.65 times less return on investment than Amplify CWP. But when comparing it to its historical volatility, FT Cboe Vest is 1.16 times less risky than Amplify CWP. It trades about 0.03 of its potential returns per unit of risk. Amplify CWP Enhanced is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,967  in Amplify CWP Enhanced on September 12, 2024 and sell it today you would earn a total of  239.00  from holding Amplify CWP Enhanced or generate 6.02% return on investment over 90 days.

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

FT Cboe Vest  vs.  Amplify CWP Enhanced

FT Cboe Vest

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FT Cboe is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Amplify CWP Enhanced

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify CWP Enhanced are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. 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 FT Cboe and Amplify CWP

The main advantage of trading using opposite FT Cboe and Amplify CWP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Cboe 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 FT Cboe Vest 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.