Correlation Between IShares Semiconductor and Amplify ETF

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

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

Diversification Opportunities for IShares Semiconductor and Amplify ETF

0.97

Correlation Coefficient

IShares Semiconductor  Amplify ETF

Almost no diversification

The 3 months correlation between IShares and Amplify is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares Semiconductor ETF and Amplify ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify ETF Trust and IShares Semiconductor 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 Semiconductor ETF are associated (or correlated) with Amplify ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify ETF Trust has no effect on the direction of IShares Semiconductor i.e., IShares Semiconductor and Amplify ETF go up and down completely randomly.

Pair Corralation between IShares Semiconductor and Amplify ETF

Given the investment horizon of 90 days iShares Semiconductor ETF is expected to generate 1.72 times more return on investment than Amplify ETF. However, IShares Semiconductor is 1.72 times more volatile than Amplify ETF Trust. It trades about -0.01 of its potential returns per unit of risk. Amplify ETF Trust is currently generating about -0.03 per unit of risk. If you would invest  21,962  in iShares Semiconductor ETF on February 11, 2025 and sell it today you would lose (1,450) from holding iShares Semiconductor ETF or give up 6.6% of portfolio value over 90 days.

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

iShares Semiconductor ETF  vs.  Amplify ETF Trust

iShares Semiconductor ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Semiconductor ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, IShares Semiconductor is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Amplify ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amplify ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Amplify ETF is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Semiconductor and Amplify ETF

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

The idea behind iShares Semiconductor ETF and Amplify ETF Trust 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.