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 NASDAQ 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
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Amplify is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NASDAQ 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 NASDAQ 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
Given the investment horizon of 90 days First Trust NASDAQ is expected to generate 1.16 times more return on investment than Amplify ETF. However, First Trust is 1.16 times more volatile than Amplify ETF Trust. It trades about -0.15 of its potential returns per unit of risk. Amplify ETF Trust is currently generating about -0.25 per unit of risk. If you would invest 3,523 in First Trust NASDAQ on November 18, 2024 and sell it today you would lose (193.00) from holding First Trust NASDAQ or give up 5.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 47.62% |
| Values | Daily Returns |
First Trust NASDAQ vs. Amplify ETF Trust
Performance |
| Timeline |
| First Trust NASDAQ |
| Amplify ETF Trust |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
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. iShares Dividend and | First Trust vs. Martin Currie Sustainable | First Trust vs. VictoryShares THB Mid | First Trust vs. Mast Global Battery |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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