Correlation Between Amplify High and VanEck BDC

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

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

Diversification Opportunities for Amplify High and VanEck BDC

0.42

Correlation Coefficient

Amplify High  VanEck BDC

Very weak diversification

The 3 months correlation between Amplify and VanEck is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Amplify High Income and VanEck BDC Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck BDC Income and Amplify High 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 High Income are associated (or correlated) with VanEck BDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck BDC Income has no effect on the direction of Amplify High i.e., Amplify High and VanEck BDC go up and down completely randomly.

Pair Corralation between Amplify High and VanEck BDC

Considering the 90-day investment horizon Amplify High Income is expected to under-perform the VanEck BDC. But the etf apears to be less risky and, when comparing its historical volatility, Amplify High Income is 1.18 times less risky than VanEck BDC. The etf trades about -0.07 of its potential returns per unit of risk. The VanEck BDC Income is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,606  in VanEck BDC Income on September 22, 2024 and sell it today you would earn a total of  52.00  from holding VanEck BDC Income or generate 3.24% return on investment over 90 days.

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

Amplify High Income  vs.  VanEck BDC Income

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.

VanEck BDC Income

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck BDC Income are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, VanEck BDC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Amplify High and VanEck BDC

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

The idea behind Amplify High Income and VanEck BDC 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..