Correlation Between Amplify High and Invesco CEF

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

Diversification Opportunities for Amplify High and Invesco CEF

0.75

Correlation Coefficient

Amplify High  Invesco CEF

Poor diversification

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

Pair Corralation between Amplify High and Invesco CEF

Considering the 90-day investment horizon Amplify High Income is expected to under-perform the Invesco CEF. In addition to that, Amplify High is 1.03 times more volatile than Invesco CEF Income. It trades about -0.01 of its total potential returns per unit of risk. Invesco CEF Income is currently generating about 0.06 per unit of volatility. If you would invest  1,926  in Invesco CEF Income on October 22, 2024 and sell it today you would earn a total of  40.00  from holding Invesco CEF Income or generate 2.08% return on investment over 90 days.

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

Amplify High Income  vs.  Invesco CEF Income

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.

Invesco CEF Income

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco CEF Income are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Invesco CEF is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Amplify High and Invesco CEF

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

The idea behind Amplify High Income and Invesco CEF Income 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.