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 Nasdaq, 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
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Amplify and First is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Amplify ETF Trust and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq 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 Nasdaq 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 Trust is expected to generate 0.88 times more return on investment than First Trust. However, Amplify ETF Trust is 1.13 times less risky than First Trust. It trades about 0.09 of its potential returns per unit of risk. First Trust Nasdaq is currently generating about 0.04 per unit of risk. If you would invest 4,519 in Amplify ETF Trust on August 30, 2024 and sell it today you would earn a total of 2,774 from holding Amplify ETF Trust or generate 61.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amplify ETF Trust vs. First Trust Nasdaq
Performance |
| Timeline |
| Amplify ETF Trust |
| First Trust Nasdaq |
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. First Trust NASDAQ | Amplify ETF vs. Global X Cybersecurity | Amplify ETF vs. First Trust Cloud | Amplify ETF vs. Robo Global Robotics |
| First Trust vs. Robo Global Robotics | First Trust vs. Robo Global Artificial | First Trust vs. Global X Robotics | First Trust vs. Direxion Daily Robotics |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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