Correlation Between Amplify High and IShares Morningstar

Can any of the company-specific risk be diversified away by investing in both Amplify High and IShares Morningstar 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 IShares Morningstar 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 iShares Morningstar Multi Asset, you can compare the effects of market volatilities on Amplify High and IShares Morningstar 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 IShares Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify High and IShares Morningstar.

Diversification Opportunities for Amplify High and IShares Morningstar

0.53

Correlation Coefficient

Amplify High  IShares Morningstar

Very weak diversification

The 3 months correlation between Amplify and IShares is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Amplify High Income and iShares Morningstar Multi Asse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Morningstar 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 IShares Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Morningstar has no effect on the direction of Amplify High i.e., Amplify High and IShares Morningstar go up and down completely randomly.

Pair Corralation between Amplify High and IShares Morningstar

Considering the 90-day investment horizon Amplify High Income is expected to generate 1.94 times more return on investment than IShares Morningstar. However, Amplify High is 1.94 times more volatile than iShares Morningstar Multi Asset. It trades about -0.05 of its potential returns per unit of risk. iShares Morningstar Multi Asset is currently generating about -0.15 per unit of risk. If you would invest  1,186  in Amplify High Income on October 10, 2024 and sell it today you would lose (22.00) from holding Amplify High Income or give up 1.85% of portfolio value over 90 days.

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

Amplify High Income  vs.  iShares Morningstar Multi Asse

Amplify High Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amplify High Income has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

iShares Morningstar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Morningstar Multi Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, IShares Morningstar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Amplify High and IShares Morningstar

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

The idea behind Amplify High Income and iShares Morningstar Multi Asset 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.