Correlation Between Arrow DWA and Amplify High

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

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

Diversification Opportunities for Arrow DWA and Amplify High

0.08

Correlation Coefficient

Arrow DWA  Amplify High

Significant diversification

The 3 months correlation between Arrow and Amplify is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Arrow DWA Tactical and Amplify High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify High Income and Arrow DWA 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 Arrow DWA Tactical 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 Income has no effect on the direction of Arrow DWA i.e., Arrow DWA and Amplify High go up and down completely randomly.

Pair Corralation between Arrow DWA and Amplify High

Given the investment horizon of 90 days Arrow DWA Tactical is expected to under-perform the Amplify High. In addition to that, Arrow DWA is 1.7 times more volatile than Amplify High Income. It trades about -0.18 of its total potential returns per unit of risk. Amplify High Income is currently generating about -0.11 per unit of volatility. If you would invest  1,198  in Amplify High Income on September 22, 2024 and sell it today you would lose (42.00) from holding Amplify High Income or give up 3.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Arrow DWA Tactical  vs.  Amplify High Income

Arrow DWA Tactical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow DWA Tactical has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Etf's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Amplify High Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amplify High Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Amplify High is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arrow DWA and Amplify High

The main advantage of trading using opposite Arrow DWA and Amplify High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow DWA 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 Arrow DWA Tactical 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.