Correlation Between Amplify ETF and First Trust
Can any of the company-specific risk be diversified away by investing in both Amplify ETF and First Trust 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 ETF and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amplify ETF Trust and First Trust S Network, you can compare the effects of market volatilities on Amplify ETF and First Trust 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 ETF with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify ETF and First Trust.
Diversification Opportunities for Amplify ETF and First Trust
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amplify and First is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Amplify ETF Trust and First Trust S Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust S and Amplify ETF 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 ETF Trust are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust S has no effect on the direction of Amplify ETF i.e., Amplify ETF and First Trust go up and down completely randomly.
Pair Corralation between Amplify ETF and First Trust
Given the investment horizon of 90 days Amplify ETF is expected to generate 1.3 times less return on investment than First Trust. In addition to that, Amplify ETF is 1.21 times more volatile than First Trust S Network. It trades about 0.05 of its total potential returns per unit of risk. First Trust S Network is currently generating about 0.08 per unit of volatility. If you would invest 2,257 in First Trust S Network on August 26, 2024 and sell it today you would earn a total of 539.00 from holding First Trust S Network or generate 23.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amplify ETF Trust vs. First Trust S Network
Performance |
| Timeline |
| Amplify ETF Trust |
| First Trust S |
Amplify ETF and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amplify ETF and First Trust
The main advantage of trading using opposite Amplify ETF and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amplify ETF position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Amplify ETF vs. Vanguard Industrials Index | Amplify ETF vs. Vanguard Materials Index | Amplify ETF vs. Vanguard Consumer Discretionary | Amplify ETF vs. Vanguard Consumer Staples |
| First Trust vs. Vanguard Industrials Index | First Trust vs. Vanguard Materials Index | First Trust vs. Vanguard Consumer Discretionary | First Trust vs. Vanguard Consumer Staples |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |