Correlation Between Amplify Thematic and WGRO

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

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

Diversification Opportunities for Amplify Thematic and WGRO

0.9

Correlation Coefficient

Amplify Thematic  WGRO

Almost no diversification

The 3 months correlation between Amplify and WGRO is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Amplify Thematic All Stars and WGRO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WGRO and Amplify Thematic 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 Thematic All Stars are associated (or correlated) with WGRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WGRO has no effect on the direction of Amplify Thematic i.e., Amplify Thematic and WGRO go up and down completely randomly.

Pair Corralation between Amplify Thematic and WGRO

If you would invest  2,187  in Amplify Thematic All Stars on September 23, 2024 and sell it today you would earn a total of  287.00  from holding Amplify Thematic All Stars or generate 13.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	1.54%
Values	Daily Returns

Amplify Thematic All Stars  vs.  WGRO

Amplify Thematic All

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify Thematic All Stars are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Amplify Thematic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

WGRO

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Amplify Thematic and WGRO

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

The idea behind Amplify Thematic All Stars and WGRO 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.