Correlation Between Amplify CWP and Invesco QQQ

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

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

Diversification Opportunities for Amplify CWP and Invesco QQQ

0.89

Correlation Coefficient

Amplify CWP  Invesco QQQ

Very poor diversification

The 3 months correlation between Amplify and Invesco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Amplify CWP Enhanced and Invesco QQQ Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco QQQ Income and Amplify CWP 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 CWP Enhanced are associated (or correlated) with Invesco QQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco QQQ Income has no effect on the direction of Amplify CWP i.e., Amplify CWP and Invesco QQQ go up and down completely randomly.

Pair Corralation between Amplify CWP and Invesco QQQ

Given the investment horizon of 90 days Amplify CWP is expected to generate 1.23 times less return on investment than Invesco QQQ. But when comparing it to its historical volatility, Amplify CWP Enhanced is 1.56 times less risky than Invesco QQQ. It trades about 0.21 of its potential returns per unit of risk. Invesco QQQ Income is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4,565  in Invesco QQQ Income on September 2, 2024 and sell it today you would earn a total of  462.00  from holding Invesco QQQ Income or generate 10.12% return on investment over 90 days.

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

Amplify CWP Enhanced  vs.  Invesco QQQ Income

Amplify CWP Enhanced

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify CWP Enhanced are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Amplify CWP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invesco QQQ Income

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco QQQ Income are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Invesco QQQ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Amplify CWP and Invesco QQQ

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

The idea behind Amplify CWP Enhanced and Invesco QQQ 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.