Correlation Between Amplify CWP and IShares Select

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Can any of the company-specific risk be diversified away by investing in both Amplify CWP and IShares Select 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 CWP and IShares Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amplify CWP Enhanced and IShares Select Dividend, you can compare the effects of market volatilities on Amplify CWP and IShares Select 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 CWP with a short position of IShares Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify CWP and IShares Select.

Diversification Opportunities for Amplify CWP and IShares Select

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Amplify and IShares is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Amplify CWP Enhanced and IShares Select Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares Select Dividend and Amplify CWP 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 CWP Enhanced are associated (or correlated) with IShares Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares Select Dividend has no effect on the direction of Amplify CWP i.e., Amplify CWP and IShares Select go up and down completely randomly.

Pair Corralation between Amplify CWP and IShares Select

Given the investment horizon of 90 days Amplify CWP is expected to generate 1.87 times less return on investment than IShares Select. But when comparing it to its historical volatility, Amplify CWP Enhanced is 1.66 times less risky than IShares Select. It trades about 0.35 of its potential returns per unit of risk. IShares Select Dividend is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  11,531  in IShares Select Dividend on December 29, 2023 and sell it today you would earn a total of  713.00  from holding IShares Select Dividend or generate 6.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Amplify CWP Enhanced  vs.  IShares Select Dividend

 Performance 
       Timeline  
Amplify CWP Enhanced 

Risk-Adjusted Performance

20 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Amplify CWP Enhanced are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Amplify CWP may actually be approaching a critical reversion point that can send shares even higher in April 2024.
IShares Select Dividend 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in IShares Select Dividend are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, IShares Select is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Amplify CWP and IShares Select Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amplify CWP and IShares Select

The main advantage of trading using opposite Amplify CWP and IShares Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amplify CWP position performs unexpectedly, IShares Select 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 Select will offset losses from the drop in IShares Select's long position.
The idea behind Amplify CWP Enhanced and IShares Select Dividend 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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