Correlation Between Global X and Amplify

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

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

Diversification Opportunities for Global X and Amplify

0.14

Correlation Coefficient

Global X  Amplify

Average diversification

The 3 months correlation between Global and Amplify is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Global X Telemedicine and Amplify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify and Global X 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 Global X Telemedicine are associated (or correlated) with Amplify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify has no effect on the direction of Global X i.e., Global X and Amplify go up and down completely randomly.

Pair Corralation between Global X and Amplify

Given the investment horizon of 90 days Global X Telemedicine is expected to generate 1.03 times more return on investment than Amplify. However, Global X is 1.03 times more volatile than Amplify. It trades about -0.02 of its potential returns per unit of risk. Amplify is currently generating about -0.03 per unit of risk. If you would invest  1,241  in Global X Telemedicine on October 11, 2024 and sell it today you would lose (223.00) from holding Global X Telemedicine or give up 17.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	82.83%
Values	Daily Returns

Global X Telemedicine  vs.  Amplify

Global X Telemedicine

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Telemedicine are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Global X is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Amplify

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amplify has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Amplify is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Global X and Amplify

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

The idea behind Global X Telemedicine and Amplify 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.