Correlation Between IShares 1 and Amplify CWP

Can any of the company-specific risk be diversified away by investing in both IShares 1 and Amplify CWP 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 IShares 1 and Amplify CWP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares 1 3 Year and Amplify CWP Enhanced, you can compare the effects of market volatilities on IShares 1 and Amplify CWP 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 IShares 1 with a short position of Amplify CWP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 1 and Amplify CWP.

Diversification Opportunities for IShares 1 and Amplify CWP

-0.53

Correlation Coefficient

IShares 1  Amplify CWP

Excellent diversification

The 3 months correlation between IShares and Amplify is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding iShares 1 3 Year and Amplify CWP Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify CWP Enhanced and IShares 1 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 iShares 1 3 Year are associated (or correlated) with Amplify CWP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify CWP Enhanced has no effect on the direction of IShares 1 i.e., IShares 1 and Amplify CWP go up and down completely randomly.

Pair Corralation between IShares 1 and Amplify CWP

Given the investment horizon of 90 days iShares 1 3 Year is expected to generate 0.5 times more return on investment than Amplify CWP. However, iShares 1 3 Year is 2.01 times less risky than Amplify CWP. It trades about 0.18 of its potential returns per unit of risk. Amplify CWP Enhanced is currently generating about -0.11 per unit of risk. If you would invest  6,710  in iShares 1 3 Year on January 8, 2025 and sell it today you would earn a total of  398.00  from holding iShares 1 3 Year or generate 5.93% return on investment over 90 days.

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

iShares 1 3 Year  vs.  Amplify CWP Enhanced

iShares 1 3

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares 1 3 Year are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, IShares 1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Amplify CWP Enhanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amplify CWP Enhanced has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with IShares 1 and Amplify CWP

The main advantage of trading using opposite IShares 1 and Amplify CWP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 1 position performs unexpectedly, Amplify CWP 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 CWP will offset losses from the drop in Amplify CWP's long position.

The idea behind iShares 1 3 Year and Amplify CWP Enhanced 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.