Correlation Between Vanguard Communication and Amplify ETF

Can any of the company-specific risk be diversified away by investing in both Vanguard Communication 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 Communication 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 Communication Services and Amplify ETF Trust, you can compare the effects of market volatilities on Vanguard Communication 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 Communication with a short position of Amplify ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Communication and Amplify ETF.

Diversification Opportunities for Vanguard Communication and Amplify ETF

0.49

Correlation Coefficient

Vanguard Communication  Amplify ETF

Very weak diversification

The 3 months correlation between Vanguard and Amplify is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Communication Service 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 Communication 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 Communication Services 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 Communication i.e., Vanguard Communication and Amplify ETF go up and down completely randomly.

Pair Corralation between Vanguard Communication and Amplify ETF

Considering the 90-day investment horizon Vanguard Communication Services is expected to under-perform the Amplify ETF. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Communication Services is 1.26 times less risky than Amplify ETF. The etf trades about -0.06 of its potential returns per unit of risk. The Amplify ETF Trust is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6,584  in Amplify ETF Trust on December 29, 2024 and sell it today you would earn a total of  112.00  from holding Amplify ETF Trust or generate 1.7% return on investment over 90 days.

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

Vanguard Communication Service  vs.  Amplify ETF Trust

Vanguard Communication

Risk-Adjusted Performance

Very Weak

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

Amplify ETF Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify ETF Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary 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.

Pair Trading with Vanguard Communication and Amplify ETF

The main advantage of trading using opposite Vanguard Communication and Amplify ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Communication 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 Communication Services 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.