Correlation Between Vanguard Financials and Amplify High

Can any of the company-specific risk be diversified away by investing in both Vanguard Financials and Amplify High 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 Vanguard Financials and Amplify High into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard Financials Index and Amplify High Income, you can compare the effects of market volatilities on Vanguard Financials and Amplify High 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 Vanguard Financials with a short position of Amplify High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Financials and Amplify High.

Diversification Opportunities for Vanguard Financials and Amplify High

0.91

Correlation Coefficient

Vanguard Financials  Amplify High

Almost no diversification

The 3 months correlation between Vanguard and Amplify is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Financials Index and Amplify High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify High me and Vanguard Financials 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 Vanguard Financials Index are associated (or correlated) with Amplify High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify High me has no effect on the direction of Vanguard Financials i.e., Vanguard Financials and Amplify High go up and down completely randomly.

Pair Corralation between Vanguard Financials and Amplify High

Considering the 90-day investment horizon Vanguard Financials Index is expected to under-perform the Amplify High. In addition to that, Vanguard Financials is 1.5 times more volatile than Amplify High Income. It trades about -0.21 of its total potential returns per unit of risk. Amplify High Income is currently generating about -0.18 per unit of volatility. If you would invest  1,188  in Amplify High Income on February 1, 2024 and sell it today you would lose (27.00) from holding Amplify High Income or give up 2.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

Vanguard Financials Index  vs.  Amplify High Income

Vanguard Financials Index

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Financials Index are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Vanguard Financials is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Amplify High me

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify High Income are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Amplify High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Financials and Amplify High

The main advantage of trading using opposite Vanguard Financials and Amplify High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Financials position performs unexpectedly, Amplify High 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 High will offset losses from the drop in Amplify High's long position.

The idea behind Vanguard Financials Index and Amplify High Income 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.