Correlation Between LHA Market and Amplify BlackSwan

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

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

Diversification Opportunities for LHA Market and Amplify BlackSwan

0.45

Correlation Coefficient

LHA Market  Amplify BlackSwan

Very weak diversification

The 3 months correlation between LHA and Amplify is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding LHA Market State and Amplify BlackSwan ISWN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify BlackSwan ISWN and LHA Market 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 LHA Market State are associated (or correlated) with Amplify BlackSwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify BlackSwan ISWN has no effect on the direction of LHA Market i.e., LHA Market and Amplify BlackSwan go up and down completely randomly.

Pair Corralation between LHA Market and Amplify BlackSwan

Given the investment horizon of 90 days LHA Market State is expected to generate 0.59 times more return on investment than Amplify BlackSwan. However, LHA Market State is 1.7 times less risky than Amplify BlackSwan. It trades about 0.07 of its potential returns per unit of risk. Amplify BlackSwan ISWN is currently generating about -0.14 per unit of risk. If you would invest  2,214  in LHA Market State on September 5, 2024 and sell it today you would earn a total of  30.94  from holding LHA Market State or generate 1.4% return on investment over 90 days.

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

LHA Market State  vs.  Amplify BlackSwan ISWN

LHA Market State

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LHA Market State has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, LHA Market is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 very healthy basic indicators, Amplify BlackSwan is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with LHA Market and Amplify BlackSwan

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

The idea behind LHA Market State and Amplify BlackSwan ISWN 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.