Correlation Between Tidal ETF and Amplify ETF

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

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

Diversification Opportunities for Tidal ETF and Amplify ETF

0.73

Correlation Coefficient

Tidal ETF  Amplify ETF

Poor diversification

The 3 months correlation between Tidal and Amplify is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tidal ETF Trust 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 Tidal 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 Tidal ETF Trust 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 Tidal ETF i.e., Tidal ETF and Amplify ETF go up and down completely randomly.

Pair Corralation between Tidal ETF and Amplify ETF

Given the investment horizon of 90 days Tidal ETF Trust is expected to generate 0.52 times more return on investment than Amplify ETF. However, Tidal ETF Trust is 1.93 times less risky than Amplify ETF. It trades about -0.28 of its potential returns per unit of risk. Amplify ETF Trust is currently generating about -0.3 per unit of risk. If you would invest  2,357  in Tidal ETF Trust on January 20, 2024 and sell it today you would lose (87.00) from holding Tidal ETF Trust or give up 3.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Tidal ETF Trust  vs.  Amplify ETF Trust

Tidal ETF Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal ETF Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Tidal ETF is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Amplify ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amplify ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Amplify ETF is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Tidal ETF and Amplify ETF

The main advantage of trading using opposite Tidal ETF and Amplify ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal ETF 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.

The idea behind Tidal ETF Trust and Amplify ETF Trust 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.