Correlation Between Invesco Dynamic and Amplify ETF

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

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

Diversification Opportunities for Invesco Dynamic and Amplify ETF

0.89

Correlation Coefficient

Invesco Dynamic  Amplify ETF

Very poor diversification

The 3 months correlation between Invesco and Amplify is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Dynamic Leisure 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 Invesco Dynamic 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 Invesco Dynamic Leisure 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 Invesco Dynamic i.e., Invesco Dynamic and Amplify ETF go up and down completely randomly.

Pair Corralation between Invesco Dynamic and Amplify ETF

Considering the 90-day investment horizon Invesco Dynamic Leisure is expected to generate 1.06 times more return on investment than Amplify ETF. However, Invesco Dynamic is 1.06 times more volatile than Amplify ETF Trust. It trades about -0.04 of its potential returns per unit of risk. Amplify ETF Trust is currently generating about -0.08 per unit of risk. If you would invest  5,238  in Invesco Dynamic Leisure on December 29, 2024 and sell it today you would lose (206.00) from holding Invesco Dynamic Leisure or give up 3.93% of portfolio value over 90 days.

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

Invesco Dynamic Leisure  vs.  Amplify ETF Trust

Invesco Dynamic Leisure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Dynamic Leisure has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady technical and fundamental indicators, Invesco Dynamic is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

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 latest sluggish performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Invesco Dynamic and Amplify ETF

The main advantage of trading using opposite Invesco Dynamic and Amplify ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Dynamic 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 Invesco Dynamic Leisure 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.