Correlation Between Amplify High and Amplify BlackSwan

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

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

Diversification Opportunities for Amplify High and Amplify BlackSwan

0.45

Correlation Coefficient

Amplify High  Amplify BlackSwan

Very weak diversification

The 3 months correlation between Amplify and Amplify is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Amplify High Income and Amplify BlackSwan ISWN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify BlackSwan ISWN and Amplify High 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 High Income are associated (or correlated) with Amplify BlackSwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify BlackSwan ISWN has no effect on the direction of Amplify High i.e., Amplify High and Amplify BlackSwan go up and down completely randomly.

Pair Corralation between Amplify High and Amplify BlackSwan

Considering the 90-day investment horizon Amplify High is expected to generate 2.42 times less return on investment than Amplify BlackSwan. But when comparing it to its historical volatility, Amplify High Income is 1.22 times less risky than Amplify BlackSwan. It trades about 0.12 of its potential returns per unit of risk. Amplify BlackSwan ISWN is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,807  in Amplify BlackSwan ISWN on December 19, 2024 and sell it today you would earn a total of  174.00  from holding Amplify BlackSwan ISWN or generate 9.63% return on investment over 90 days.

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

Amplify High Income  vs.  Amplify BlackSwan ISWN

Amplify High Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify High Income are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Amplify High is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Amplify BlackSwan ISWN

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify BlackSwan ISWN are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Amplify BlackSwan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Amplify High and Amplify BlackSwan

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

The idea behind Amplify High Income and Amplify BlackSwan ISWN 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.