Correlation Between MicroSectors FANG and Amplify ETF
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG 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 MicroSectors FANG and Amplify ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG Index and Amplify ETF Trust, you can compare the effects of market volatilities on MicroSectors FANG 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 MicroSectors FANG with a short position of Amplify ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Amplify ETF.
Diversification Opportunities for MicroSectors FANG and Amplify ETF
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MicroSectors and Amplify is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index 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 MicroSectors FANG 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 FANG Index 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 MicroSectors FANG i.e., MicroSectors FANG and Amplify ETF go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Amplify ETF
Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 3.6 times more return on investment than Amplify ETF. However, MicroSectors FANG is 3.6 times more volatile than Amplify ETF Trust. It trades about 0.37 of its potential returns per unit of risk. Amplify ETF Trust is currently generating about -0.32 per unit of risk. If you would invest 1,138 in MicroSectors FANG Index on December 10, 2024 and sell it today you would earn a total of 508.00 from holding MicroSectors FANG Index or generate 44.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
MicroSectors FANG Index vs. Amplify ETF Trust
Performance |
| Timeline |
| MicroSectors FANG Index |
| Amplify ETF Trust |
MicroSectors FANG and Amplify ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Amplify ETF
The main advantage of trading using opposite MicroSectors FANG and Amplify ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG 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.| MicroSectors FANG vs. MicroSectors FANG Index | ||
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Check out your portfolio center.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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