Correlation Between Cabana Target and Amplify High

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

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

Diversification Opportunities for Cabana Target and Amplify High

0.79

Correlation Coefficient

Cabana Target  Amplify High

Poor diversification

The 3 months correlation between Cabana and Amplify is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cabana Target Drawdown 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 Cabana Target 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 Cabana Target Drawdown 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 Cabana Target i.e., Cabana Target and Amplify High go up and down completely randomly.

Pair Corralation between Cabana Target and Amplify High

Given the investment horizon of 90 days Cabana Target Drawdown is expected to generate 1.1 times more return on investment than Amplify High. However, Cabana Target is 1.1 times more volatile than Amplify High Income. It trades about -0.06 of its potential returns per unit of risk. Amplify High Income is currently generating about -0.11 per unit of risk. If you would invest  2,533  in Cabana Target Drawdown on September 22, 2024 and sell it today you would lose (58.00) from holding Cabana Target Drawdown or give up 2.29% of portfolio value over 90 days.

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

Cabana Target Drawdown  vs.  Amplify High Income

Cabana Target Drawdown

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cabana Target Drawdown has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Cabana Target is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Cabana Target and Amplify High

The main advantage of trading using opposite Cabana Target and Amplify High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabana Target 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 Cabana Target Drawdown 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.