Correlation Between Amplify ETF and Global X

Can any of the company-specific risk be diversified away by investing in both Amplify ETF 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 ETF 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 ETF Trust and Global X Cybersecurity, you can compare the effects of market volatilities on Amplify ETF 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 ETF with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify ETF and Global X.

Diversification Opportunities for Amplify ETF and Global X

0.87

Correlation Coefficient

Amplify ETF  Global X

Very poor diversification

The 3 months correlation between Amplify and Global is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Amplify ETF Trust and Global X Cybersecurity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Cybersecurity and Amplify ETF 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 ETF Trust 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 Cybersecurity has no effect on the direction of Amplify ETF i.e., Amplify ETF and Global X go up and down completely randomly.

Pair Corralation between Amplify ETF and Global X

Given the investment horizon of 90 days Amplify ETF Trust is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, Amplify ETF Trust is 1.03 times less risky than Global X. The etf trades about -0.01 of its potential returns per unit of risk. The Global X Cybersecurity is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,219  in Global X Cybersecurity on December 28, 2024 and sell it today you would earn a total of  131.00  from holding Global X Cybersecurity or generate 4.07% return on investment over 90 days.

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

Amplify ETF Trust  vs.  Global X Cybersecurity

Amplify ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amplify ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Amplify ETF is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Global X Cybersecurity

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Cybersecurity are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Global X is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Amplify ETF and Global X

The main advantage of trading using opposite Amplify ETF and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amplify ETF 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 ETF Trust and Global X Cybersecurity 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.