Correlation Between Vanguard Consumer and Amplify ETF

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

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

Diversification Opportunities for Vanguard Consumer and Amplify ETF

0.75

Correlation Coefficient

Vanguard Consumer  Amplify ETF

Poor diversification

The 3 months correlation between Vanguard and Amplify is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Consumer Discretionar 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 Vanguard Consumer 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 Vanguard Consumer Discretionary 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 Vanguard Consumer i.e., Vanguard Consumer and Amplify ETF go up and down completely randomly.

Pair Corralation between Vanguard Consumer and Amplify ETF

Considering the 90-day investment horizon Vanguard Consumer Discretionary is expected to under-perform the Amplify ETF. In addition to that, Vanguard Consumer is 1.08 times more volatile than Amplify ETF Trust. It trades about -0.15 of its total potential returns per unit of risk. Amplify ETF Trust is currently generating about -0.08 per unit of volatility. If you would invest  2,148  in Amplify ETF Trust on December 30, 2024 and sell it today you would lose (149.00) from holding Amplify ETF Trust or give up 6.94% of portfolio value over 90 days.

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

Vanguard Consumer Discretionar  vs.  Amplify ETF Trust

Vanguard Consumer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Consumer Discretionary has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Etf's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail 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 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 Vanguard Consumer and Amplify ETF

The main advantage of trading using opposite Vanguard Consumer and Amplify ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Consumer 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 Vanguard Consumer Discretionary 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.