Correlation Between First Trust and Amplify ETF
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Amplify ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Consumer and Amplify ETF Trust, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Amplify ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Amplify ETF.
Diversification Opportunities for First Trust and Amplify ETF
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Amplify is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Consumer 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 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 Consumer 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 First Trust i.e., First Trust and Amplify ETF go up and down completely randomly.
Pair Corralation between First Trust and Amplify ETF
Considering the 90-day investment horizon First Trust is expected to generate 1.12 times less return on investment than Amplify ETF. But when comparing it to its historical volatility, First Trust Consumer is 1.28 times less risky than Amplify ETF. It trades about 0.33 of its potential returns per unit of risk. Amplify ETF Trust is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,008 in Amplify ETF Trust on August 26, 2024 and sell it today you would earn a total of 147.00 from holding Amplify ETF Trust or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Consumer vs. Amplify ETF Trust
Performance |
| Timeline |
| First Trust Consumer |
| Amplify ETF Trust |
First Trust and Amplify ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Amplify ETF
The main advantage of trading using opposite First Trust and Amplify ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust Consumer | First Trust vs. First Trust IndustrialsProducer | First Trust vs. First Trust Health | First Trust vs. First Trust Materials |
| Amplify ETF vs. Invesco Dynamic Leisure | Amplify ETF vs. US Global Jets | Amplify ETF vs. Global X Infrastructure | Amplify ETF vs. ProShares Online Retail |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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