Correlation Between WisdomTree New and Amplify Cash

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

By analyzing existing cross correlation between WisdomTree New Economy and Amplify Cash Flow, you can compare the effects of market volatilities on WisdomTree New and Amplify Cash 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 WisdomTree New with a short position of Amplify Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree New and Amplify Cash.

Diversification Opportunities for WisdomTree New and Amplify Cash

-0.54

Correlation Coefficient

WisdomTree New  Amplify Cash

Excellent diversification

The 3 months correlation between WisdomTree and Amplify is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree New Economy and Amplify Cash Flow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify Cash Flow and WisdomTree New 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 WisdomTree New Economy are associated (or correlated) with Amplify Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify Cash Flow has no effect on the direction of WisdomTree New i.e., WisdomTree New and Amplify Cash go up and down completely randomly.

Pair Corralation between WisdomTree New and Amplify Cash

Given the investment horizon of 90 days WisdomTree New Economy is expected to under-perform the Amplify Cash. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree New Economy is 1.13 times less risky than Amplify Cash. The etf trades about -0.01 of its potential returns per unit of risk. The Amplify Cash Flow is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,945  in Amplify Cash Flow on August 30, 2024 and sell it today you would earn a total of  222.00  from holding Amplify Cash Flow or generate 7.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

WisdomTree New Economy  vs.  Amplify Cash Flow

WisdomTree New Economy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Amplify Cash Flow

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify Cash Flow are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Amplify Cash may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with WisdomTree New and Amplify Cash

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

The idea behind WisdomTree New Economy and Amplify Cash Flow 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.