Correlation Between First Trust and Amplify Alternative

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Can any of the company-specific risk be diversified away by investing in both First Trust and Amplify Alternative 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 First Trust and Amplify Alternative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust NASDAQ and Amplify Alternative Harvest, you can compare the effects of market volatilities on First Trust and Amplify Alternative 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 First Trust with a short position of Amplify Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Amplify Alternative.

Diversification Opportunities for First Trust and Amplify Alternative

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between First and Amplify is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NASDAQ and Amplify Alternative Harvest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify Alternative and First Trust 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 First Trust NASDAQ are associated (or correlated) with Amplify Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify Alternative has no effect on the direction of First Trust i.e., First Trust and Amplify Alternative go up and down completely randomly.

Pair Corralation between First Trust and Amplify Alternative

Given the investment horizon of 90 days First Trust NASDAQ is expected to under-perform the Amplify Alternative. But the etf apears to be less risky and, when comparing its historical volatility, First Trust NASDAQ is 2.22 times less risky than Amplify Alternative. The etf trades about -0.19 of its potential returns per unit of risk. The Amplify Alternative Harvest is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  358.00  in Amplify Alternative Harvest on January 20, 2024 and sell it today you would earn a total of  22.00  from holding Amplify Alternative Harvest or generate 6.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

First Trust NASDAQ  vs.  Amplify Alternative Harvest

 Performance 
       Timeline  
First Trust NASDAQ 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days First Trust NASDAQ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's essential indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the ETF investors.
Amplify Alternative 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Amplify Alternative Harvest are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Amplify Alternative revealed solid returns over the last few months and may actually be approaching a breakup point.

First Trust and Amplify Alternative Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Trust and Amplify Alternative

The main advantage of trading using opposite First Trust and Amplify Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Amplify Alternative 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 Alternative will offset losses from the drop in Amplify Alternative's long position.
The idea behind First Trust NASDAQ and Amplify Alternative Harvest 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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