Correlation Between Amplify Lithium and Global X

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

By analyzing existing cross correlation between Amplify Lithium Battery and Global X Hydrogen, you can compare the effects of market volatilities on Amplify Lithium and Global X 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 Lithium with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify Lithium and Global X.

Diversification Opportunities for Amplify Lithium and Global X

-0.03

Correlation Coefficient

Amplify Lithium  Global X

Good diversification

The 3 months correlation between Amplify and Global is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Amplify Lithium Battery and Global X Hydrogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Hydrogen and Amplify Lithium 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 Lithium Battery are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Hydrogen has no effect on the direction of Amplify Lithium i.e., Amplify Lithium and Global X go up and down completely randomly.

Pair Corralation between Amplify Lithium and Global X

Given the investment horizon of 90 days Amplify Lithium Battery is expected to generate 0.64 times more return on investment than Global X. However, Amplify Lithium Battery is 1.56 times less risky than Global X. It trades about -0.03 of its potential returns per unit of risk. Global X Hydrogen is currently generating about -0.06 per unit of risk. If you would invest  1,238  in Amplify Lithium Battery on September 3, 2024 and sell it today you would lose (294.00) from holding Amplify Lithium Battery or give up 23.75% of portfolio value over 90 days.

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

Amplify Lithium Battery  vs.  Global X Hydrogen

Amplify Lithium Battery

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify Lithium Battery are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Amplify Lithium unveiled solid returns over the last few months and may actually be approaching a breakup point.

Global X Hydrogen

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Hydrogen are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Amplify Lithium and Global X

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

The idea behind Amplify Lithium Battery and Global X Hydrogen 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.