Correlation Between Amplify Thematic and Amplify ETF

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

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

Diversification Opportunities for Amplify Thematic and Amplify ETF

0.74

Correlation Coefficient

Amplify Thematic  Amplify ETF

Poor diversification

The 3 months correlation between Amplify and Amplify is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amplify Thematic All Stars 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 Amplify Thematic 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 Thematic All Stars 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 Amplify Thematic i.e., Amplify Thematic and Amplify ETF go up and down completely randomly.

Pair Corralation between Amplify Thematic and Amplify ETF

Given the investment horizon of 90 days Amplify Thematic All Stars is expected to under-perform the Amplify ETF. In addition to that, Amplify Thematic is 2.05 times more volatile than Amplify ETF Trust. It trades about -0.05 of its total potential returns per unit of risk. Amplify ETF Trust is currently generating about -0.03 per unit of volatility. If you would invest  2,205  in Amplify ETF Trust on December 20, 2024 and sell it today you would lose (28.00) from holding Amplify ETF Trust or give up 1.27% of portfolio value over 90 days.

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

Amplify Thematic All Stars  vs.  Amplify ETF Trust

Amplify Thematic All

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amplify Thematic All Stars has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Amplify Thematic is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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

Pair Trading with Amplify Thematic and Amplify ETF

The main advantage of trading using opposite Amplify Thematic and Amplify ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amplify Thematic 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 Amplify Thematic All Stars 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.