Correlation Between Amplify ETF and IShares Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Amplify ETF and IShares Telecommunicatio 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 IShares Telecommunicatio 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 iShares Telecommunications ETF, you can compare the effects of market volatilities on Amplify ETF and IShares Telecommunicatio 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 IShares Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify ETF and IShares Telecommunicatio.
Diversification Opportunities for Amplify ETF and IShares Telecommunicatio
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amplify and IShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amplify ETF Trust and iShares Telecommunications ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares Telecommunicatio 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 IShares Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares Telecommunicatio has no effect on the direction of Amplify ETF i.e., Amplify ETF and IShares Telecommunicatio go up and down completely randomly.
Pair Corralation between Amplify ETF and IShares Telecommunicatio
Given the investment horizon of 90 days Amplify ETF is expected to generate 2.18 times less return on investment than IShares Telecommunicatio. In addition to that, Amplify ETF is 1.54 times more volatile than iShares Telecommunications ETF. It trades about 0.07 of its total potential returns per unit of risk. iShares Telecommunications ETF is currently generating about 0.24 per unit of volatility. If you would invest 2,135 in iShares Telecommunications ETF on September 1, 2024 and sell it today you would earn a total of 639.00 from holding iShares Telecommunications ETF or generate 29.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Amplify ETF Trust vs. iShares Telecommunications ETF
Performance |
| Timeline |
| Amplify ETF Trust |
| IShares Telecommunicatio |
Amplify ETF and IShares Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amplify ETF and IShares Telecommunicatio
The main advantage of trading using opposite Amplify ETF and IShares Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amplify ETF position performs unexpectedly, IShares Telecommunicatio 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 IShares Telecommunicatio will offset losses from the drop in IShares Telecommunicatio's long position.| Amplify ETF vs. VanEck Video Gaming | Amplify ETF vs. Roundhill Video Games | Amplify ETF vs. Global X Social | Amplify ETF vs. Amplify ETF Trust |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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