Correlation Between Amplify CWP and Northern Lights

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

Diversification Opportunities for Amplify CWP and Northern Lights

0.16

Correlation Coefficient

Amplify CWP  Northern Lights

Average diversification

The 3 months correlation between Amplify and Northern is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Amplify CWP Enhanced and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights 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 Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of Amplify CWP i.e., Amplify CWP and Northern Lights go up and down completely randomly.

Pair Corralation between Amplify CWP and Northern Lights

Given the investment horizon of 90 days Amplify CWP Enhanced is expected to generate 0.54 times more return on investment than Northern Lights. However, Amplify CWP Enhanced is 1.84 times less risky than Northern Lights. It trades about 0.2 of its potential returns per unit of risk. Northern Lights is currently generating about 0.02 per unit of risk. If you would invest  4,255  in Amplify CWP Enhanced on July 29, 2025 and sell it today you would earn a total of  270.00  from holding Amplify CWP Enhanced or generate 6.35% return on investment over 90 days.

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

Amplify CWP Enhanced  vs.  Northern Lights

Amplify CWP Enhanced

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify CWP Enhanced are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Amplify CWP is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Northern Lights

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Lights are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Northern Lights 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 Amplify CWP and Northern Lights

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

The idea behind Amplify CWP Enhanced and Northern Lights 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.