Correlation Between SPDR SP and Amplify Lithium

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

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

Diversification Opportunities for SPDR SP and Amplify Lithium

0.82

Correlation Coefficient

SPDR SP  Amplify Lithium

Very poor diversification

The 3 months correlation between SPDR and Amplify is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Kensho and Amplify Lithium Battery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify Lithium Battery and SPDR SP 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 SPDR SP Kensho are associated (or correlated) with Amplify Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify Lithium Battery has no effect on the direction of SPDR SP i.e., SPDR SP and Amplify Lithium go up and down completely randomly.

Pair Corralation between SPDR SP and Amplify Lithium

Given the investment horizon of 90 days SPDR SP is expected to generate 1.48 times less return on investment than Amplify Lithium. But when comparing it to its historical volatility, SPDR SP Kensho is 1.23 times less risky than Amplify Lithium. It trades about 0.1 of its potential returns per unit of risk. Amplify Lithium Battery is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  823.00  in Amplify Lithium Battery on September 4, 2024 and sell it today you would earn a total of  120.00  from holding Amplify Lithium Battery or generate 14.58% return on investment over 90 days.

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

SPDR SP Kensho  vs.  Amplify Lithium Battery

SPDR SP Kensho

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Kensho are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with SPDR SP and Amplify Lithium

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

The idea behind SPDR SP Kensho and Amplify Lithium Battery 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 Transaction History module to view history of all your transactions and understand their impact on performance.