Correlation Between Amplify ETF and Princeton Fund

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

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

Diversification Opportunities for Amplify ETF and Princeton Fund

0.64

Correlation Coefficient

Amplify ETF  Princeton Fund

Poor diversification

The 3 months correlation between Amplify and Princeton is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Amplify ETF Trust and Princeton Fund Advisors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Princeton Fund Advisors and Amplify 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 Amplify ETF Trust are associated (or correlated) with Princeton Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Princeton Fund Advisors has no effect on the direction of Amplify ETF i.e., Amplify ETF and Princeton Fund go up and down completely randomly.

Pair Corralation between Amplify ETF and Princeton Fund

Given the investment horizon of 90 days Amplify ETF is expected to generate 1.91 times less return on investment than Princeton Fund. In addition to that, Amplify ETF is 1.14 times more volatile than Princeton Fund Advisors. It trades about 0.02 of its total potential returns per unit of risk. Princeton Fund Advisors is currently generating about 0.04 per unit of volatility. If you would invest  1,561  in Princeton Fund Advisors on January 19, 2024 and sell it today you would earn a total of  138.00  from holding Princeton Fund Advisors or generate 8.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	43.26%
Values	Daily Returns

Amplify ETF Trust  vs.  Princeton Fund Advisors

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.

Princeton Fund Advisors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Princeton Fund Advisors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Princeton Fund is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Amplify ETF and Princeton Fund

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

The idea behind Amplify ETF Trust and Princeton Fund Advisors 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.