Correlation Between Schwab International and Amplify International

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

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

Diversification Opportunities for Schwab International and Amplify International

0.57

Correlation Coefficient

Schwab International  Amplify International

Very weak diversification

The 3 months correlation between Schwab and Amplify is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Schwab International Dividend and Amplify International Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify International and Schwab International 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 Schwab International Dividend are associated (or correlated) with Amplify International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify International has no effect on the direction of Schwab International i.e., Schwab International and Amplify International go up and down completely randomly.

Pair Corralation between Schwab International and Amplify International

Given the investment horizon of 90 days Schwab International Dividend is expected to under-perform the Amplify International. But the etf apears to be less risky and, when comparing its historical volatility, Schwab International Dividend is 1.06 times less risky than Amplify International. The etf trades about -0.1 of its potential returns per unit of risk. The Amplify International Enhanced is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,081  in Amplify International Enhanced on October 26, 2024 and sell it today you would earn a total of  25.00  from holding Amplify International Enhanced or generate 0.81% return on investment over 90 days.

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

Schwab International Dividend  vs.  Amplify International Enhanced

Schwab International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Amplify International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify International Enhanced are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Amplify International is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Schwab International and Amplify International

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

The idea behind Schwab International Dividend and Amplify International 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.