Correlation Between Amplify High and Cabana Target

Can any of the company-specific risk be diversified away by investing in both Amplify High and Cabana Target 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 Cabana Target 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 Cabana Target Drawdown, you can compare the effects of market volatilities on Amplify High and Cabana Target 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 Cabana Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify High and Cabana Target.

Diversification Opportunities for Amplify High and Cabana Target

0.92

Correlation Coefficient

Amplify High  Cabana Target

Almost no diversification

The 3 months correlation between Amplify and Cabana is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Amplify High Income and Cabana Target Drawdown in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabana Target Drawdown 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 Cabana Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabana Target Drawdown has no effect on the direction of Amplify High i.e., Amplify High and Cabana Target go up and down completely randomly.

Pair Corralation between Amplify High and Cabana Target

Considering the 90-day investment horizon Amplify High Income is expected to generate 0.87 times more return on investment than Cabana Target. However, Amplify High Income is 1.15 times less risky than Cabana Target. It trades about 0.06 of its potential returns per unit of risk. Cabana Target Drawdown is currently generating about 0.02 per unit of risk. If you would invest  1,148  in Amplify High Income on February 2, 2024 and sell it today you would earn a total of  22.00  from holding Amplify High Income or generate 1.92% return on investment over 90 days.

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

Amplify High Income  vs.  Cabana Target Drawdown

Amplify High me

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify High Income are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Amplify High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cabana Target Drawdown

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cabana Target Drawdown are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Cabana Target 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 Cabana Target

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

The idea behind Amplify High Income and Cabana Target Drawdown 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.