Correlation Between IShares Biotechnology and Amplify ETF
Can any of the company-specific risk be diversified away by investing in both IShares Biotechnology 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 IShares Biotechnology and Amplify ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Biotechnology ETF and Amplify ETF Trust, you can compare the effects of market volatilities on IShares Biotechnology 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 IShares Biotechnology with a short position of Amplify ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Biotechnology and Amplify ETF.
Diversification Opportunities for IShares Biotechnology and Amplify ETF
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Amplify is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding iShares Biotechnology ETF 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 IShares Biotechnology 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 iShares Biotechnology ETF 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 IShares Biotechnology i.e., IShares Biotechnology and Amplify ETF go up and down completely randomly.
Pair Corralation between IShares Biotechnology and Amplify ETF
Considering the 90-day investment horizon iShares Biotechnology ETF is expected to generate 1.34 times more return on investment than Amplify ETF. However, IShares Biotechnology is 1.34 times more volatile than Amplify ETF Trust. It trades about -0.16 of its potential returns per unit of risk. Amplify ETF Trust is currently generating about -0.48 per unit of risk. If you would invest 14,400 in iShares Biotechnology ETF on August 23, 2024 and sell it today you would lose (790.00) from holding iShares Biotechnology ETF or give up 5.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Biotechnology ETF vs. Amplify ETF Trust
Performance |
| Timeline |
| iShares Biotechnology ETF |
| Amplify ETF Trust |
IShares Biotechnology and Amplify ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Biotechnology and Amplify ETF
The main advantage of trading using opposite IShares Biotechnology and Amplify ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Biotechnology 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.| IShares Biotechnology vs. First Trust Exchange Traded | IShares Biotechnology vs. Horizon Kinetics Medical | IShares Biotechnology vs. Harbor Health Care | IShares Biotechnology vs. Fidelity MSCI Health |
| Amplify ETF vs. Franklin Templeton ETF | Amplify ETF vs. Tidal Trust II | Amplify ETF vs. Tidal Trust II | Amplify ETF vs. iShares Dividend and |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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