Correlation Between Amplify ETF and CONSTELLATION

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

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

Diversification Opportunities for Amplify ETF and CONSTELLATION

-0.75

Correlation Coefficient

Amplify ETF  CONSTELLATION

Pay attention - limited upside

The 3 months correlation between Amplify and CONSTELLATION is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Amplify ETF Trust and CONSTELLATION BRANDS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSTELLATION BRANDS INC and Amplify ETF 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 ETF Trust are associated (or correlated) with CONSTELLATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSTELLATION BRANDS INC has no effect on the direction of Amplify ETF i.e., Amplify ETF and CONSTELLATION go up and down completely randomly.

Pair Corralation between Amplify ETF and CONSTELLATION

Given the investment horizon of 90 days Amplify ETF is expected to generate 492.55 times less return on investment than CONSTELLATION. But when comparing it to its historical volatility, Amplify ETF Trust is 2388.63 times less risky than CONSTELLATION. It trades about 0.46 of its potential returns per unit of risk. CONSTELLATION BRANDS INC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  10,092  in CONSTELLATION BRANDS INC on October 3, 2024 and sell it today you would lose (335.00) from holding CONSTELLATION BRANDS INC or give up 3.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	79.27%
Values	Daily Returns

Amplify ETF Trust  vs.  CONSTELLATION BRANDS INC

Amplify ETF Trust

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify ETF Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Amplify ETF is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

CONSTELLATION BRANDS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTELLATION BRANDS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CONSTELLATION is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amplify ETF and CONSTELLATION

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

The idea behind Amplify ETF Trust and CONSTELLATION BRANDS INC 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.