Correlation Between Amplify Inflation and Goldman Sachs

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

By analyzing existing cross correlation between Amplify Inflation Fighter and Goldman Sachs ETF, you can compare the effects of market volatilities on Amplify Inflation and Goldman Sachs 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 Inflation with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify Inflation and Goldman Sachs.

Diversification Opportunities for Amplify Inflation and Goldman Sachs

0.83

Correlation Coefficient

Amplify Inflation  Goldman Sachs

Very poor diversification

The 3 months correlation between Amplify and Goldman is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Amplify Inflation Fighter and Goldman Sachs ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs ETF and Amplify Inflation 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 Inflation Fighter are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs ETF has no effect on the direction of Amplify Inflation i.e., Amplify Inflation and Goldman Sachs go up and down completely randomly.

Pair Corralation between Amplify Inflation and Goldman Sachs

Given the investment horizon of 90 days Amplify Inflation Fighter is expected to under-perform the Goldman Sachs. In addition to that, Amplify Inflation is 1.26 times more volatile than Goldman Sachs ETF. It trades about -0.06 of its total potential returns per unit of risk. Goldman Sachs ETF is currently generating about 0.0 per unit of volatility. If you would invest  4,828  in Goldman Sachs ETF on February 4, 2024 and sell it today you would lose (4.00) from holding Goldman Sachs ETF or give up 0.08% of portfolio value over 90 days.

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

Amplify Inflation Fighter  vs.  Goldman Sachs ETF

Amplify Inflation Fighter

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify Inflation Fighter are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Amplify Inflation may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Goldman Sachs ETF

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs ETF are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Amplify Inflation and Goldman Sachs

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

The idea behind Amplify Inflation Fighter and Goldman Sachs ETF 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.