Correlation Between MicroSectors Solactive and Amplify Transformational

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

By analyzing existing cross correlation between MicroSectors Solactive FANG and Amplify Transformational Data, you can compare the effects of market volatilities on MicroSectors Solactive and Amplify Transformational 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 MicroSectors Solactive with a short position of Amplify Transformational. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors Solactive and Amplify Transformational.

Diversification Opportunities for MicroSectors Solactive and Amplify Transformational

0.61

Correlation Coefficient

MicroSectors Solactive  Amplify Transformational

Poor diversification

The 3 months correlation between MicroSectors and Amplify is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors Solactive FANG and Amplify Transformational Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify Transformational and MicroSectors Solactive 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 MicroSectors Solactive FANG are associated (or correlated) with Amplify Transformational. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify Transformational has no effect on the direction of MicroSectors Solactive i.e., MicroSectors Solactive and Amplify Transformational go up and down completely randomly.

Pair Corralation between MicroSectors Solactive and Amplify Transformational

Given the investment horizon of 90 days MicroSectors Solactive FANG is expected to generate 1.57 times more return on investment than Amplify Transformational. However, MicroSectors Solactive is 1.57 times more volatile than Amplify Transformational Data. It trades about 0.29 of its potential returns per unit of risk. Amplify Transformational Data is currently generating about 0.27 per unit of risk. If you would invest  10,355  in MicroSectors Solactive FANG on May 1, 2025 and sell it today you would earn a total of  8,416  from holding MicroSectors Solactive FANG or generate 81.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

MicroSectors Solactive FANG  vs.  Amplify Transformational Data

MicroSectors Solactive

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MicroSectors Solactive FANG are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, MicroSectors Solactive showed solid returns over the last few months and may actually be approaching a breakup point.

Amplify Transformational

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify Transformational Data are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Amplify Transformational disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MicroSectors Solactive and Amplify Transformational

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

The idea behind MicroSectors Solactive FANG and Amplify Transformational Data 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..