Correlation Between First Trust and Amplify Cybersecurity

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

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

Diversification Opportunities for First Trust and Amplify Cybersecurity

0.96

Correlation Coefficient

First Trust  Amplify Cybersecurity

Almost no diversification

The 3 months correlation between First and Amplify is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NASDAQ and Amplify Cybersecurity ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify Cybersecurity ETF and First Trust 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 First Trust NASDAQ are associated (or correlated) with Amplify Cybersecurity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify Cybersecurity ETF has no effect on the direction of First Trust i.e., First Trust and Amplify Cybersecurity go up and down completely randomly.

Pair Corralation between First Trust and Amplify Cybersecurity

Given the investment horizon of 90 days First Trust NASDAQ is expected to under-perform the Amplify Cybersecurity. But the etf apears to be less risky and, when comparing its historical volatility, First Trust NASDAQ is 1.12 times less risky than Amplify Cybersecurity. The etf trades about -0.07 of its potential returns per unit of risk. The Amplify Cybersecurity ETF is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  8,367  in Amplify Cybersecurity ETF on May 16, 2025 and sell it today you would lose (127.00) from holding Amplify Cybersecurity ETF or give up 1.52% of portfolio value over 90 days.

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

First Trust NASDAQ  vs.  Amplify Cybersecurity ETF

First Trust NASDAQ

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust NASDAQ are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, First Trust is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Amplify Cybersecurity ETF

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify Cybersecurity ETF are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Amplify Cybersecurity is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with First Trust and Amplify Cybersecurity

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

The idea behind First Trust NASDAQ and Amplify Cybersecurity 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.