Correlation Between Amplify Thematic and IShares MSCI

Can any of the company-specific risk be diversified away by investing in both Amplify Thematic and IShares MSCI 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 IShares MSCI 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 iShares MSCI EAFE, you can compare the effects of market volatilities on Amplify Thematic and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify Thematic and IShares MSCI.

Diversification Opportunities for Amplify Thematic and IShares MSCI

-0.1

Correlation Coefficient

Amplify Thematic  IShares MSCI

Good diversification

The 3 months correlation between Amplify and IShares is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Amplify Thematic All Stars and iShares MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI EAFE 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI EAFE has no effect on the direction of Amplify Thematic i.e., Amplify Thematic and IShares MSCI go up and down completely randomly.

Pair Corralation between Amplify Thematic and IShares MSCI

Given the investment horizon of 90 days Amplify Thematic All Stars is expected to under-perform the IShares MSCI. In addition to that, Amplify Thematic is 1.75 times more volatile than iShares MSCI EAFE. It trades about -0.05 of its total potential returns per unit of risk. iShares MSCI EAFE is currently generating about 0.13 per unit of volatility. If you would invest  6,085  in iShares MSCI EAFE on December 29, 2024 and sell it today you would earn a total of  405.00  from holding iShares MSCI EAFE or generate 6.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.05%
Values	Daily Returns

Amplify Thematic All Stars  vs.  iShares MSCI EAFE

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.

iShares MSCI EAFE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI EAFE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Amplify Thematic and IShares MSCI

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

The idea behind Amplify Thematic All Stars and iShares MSCI EAFE 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..