Correlation Between Amplify CWP and Vanguard FTSE

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

Diversification Opportunities for Amplify CWP and Vanguard FTSE

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Amplify and Vanguard is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Amplify CWP Enhanced and Vanguard FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Developed 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 Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Developed has no effect on the direction of Amplify CWP i.e., Amplify CWP and Vanguard FTSE go up and down completely randomly.

Pair Corralation between Amplify CWP and Vanguard FTSE

Given the investment horizon of 90 days Amplify CWP is expected to generate 1.04 times less return on investment than Vanguard FTSE. But when comparing it to its historical volatility, Amplify CWP Enhanced is 1.38 times less risky than Vanguard FTSE. It trades about 0.04 of its potential returns per unit of risk. Vanguard FTSE Developed is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,398  in Vanguard FTSE Developed on December 30, 2023 and sell it today you would earn a total of  619.00  from holding Vanguard FTSE Developed or generate 14.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Amplify CWP Enhanced  vs.  Vanguard FTSE Developed

 Performance 
       Timeline  
Amplify CWP Enhanced 

Risk-Adjusted Performance

19 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Amplify CWP Enhanced are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Amplify CWP may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Vanguard FTSE Developed 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Developed are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Vanguard FTSE may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Amplify CWP and Vanguard FTSE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amplify CWP and Vanguard FTSE

The main advantage of trading using opposite Amplify CWP and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amplify CWP position performs unexpectedly, Vanguard FTSE 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 Vanguard FTSE will offset losses from the drop in Vanguard FTSE's long position.
The idea behind Amplify CWP Enhanced and Vanguard FTSE Developed 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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