Correlation Between Amplify BlackSwan and VictoryShares Hedged
Can any of the company-specific risk be diversified away by investing in both Amplify BlackSwan and VictoryShares Hedged 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 BlackSwan and VictoryShares Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amplify BlackSwan Growth and VictoryShares Hedged Equity, you can compare the effects of market volatilities on Amplify BlackSwan and VictoryShares Hedged 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 BlackSwan with a short position of VictoryShares Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify BlackSwan and VictoryShares Hedged.
Diversification Opportunities for Amplify BlackSwan and VictoryShares Hedged
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amplify and VictoryShares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Amplify BlackSwan Growth and VictoryShares Hedged Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares Hedged and Amplify BlackSwan 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 BlackSwan Growth are associated (or correlated) with VictoryShares Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares Hedged has no effect on the direction of Amplify BlackSwan i.e., Amplify BlackSwan and VictoryShares Hedged go up and down completely randomly.
Pair Corralation between Amplify BlackSwan and VictoryShares Hedged
Given the investment horizon of 90 days Amplify BlackSwan Growth is expected to generate 1.54 times more return on investment than VictoryShares Hedged. However, Amplify BlackSwan is 1.54 times more volatile than VictoryShares Hedged Equity. It trades about 0.14 of its potential returns per unit of risk. VictoryShares Hedged Equity is currently generating about 0.09 per unit of risk. If you would invest 2,998 in Amplify BlackSwan Growth on August 30, 2024 and sell it today you would earn a total of 67.00 from holding Amplify BlackSwan Growth or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amplify BlackSwan Growth vs. VictoryShares Hedged Equity
Performance |
| Timeline |
| Amplify BlackSwan Growth |
| VictoryShares Hedged |
Amplify BlackSwan and VictoryShares Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amplify BlackSwan and VictoryShares Hedged
The main advantage of trading using opposite Amplify BlackSwan and VictoryShares Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amplify BlackSwan position performs unexpectedly, VictoryShares Hedged 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 VictoryShares Hedged will offset losses from the drop in VictoryShares Hedged's long position.The idea behind Amplify BlackSwan Growth and VictoryShares Hedged Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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