Correlation Between IShares Self and Amplify Lithium

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

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

Diversification Opportunities for IShares Self and Amplify Lithium

0.31

Correlation Coefficient

IShares Self  Amplify Lithium

Weak diversification

The 3 months correlation between IShares and Amplify is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding iShares Self Driving EV 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 IShares Self 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 iShares Self Driving EV 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 IShares Self i.e., IShares Self and Amplify Lithium go up and down completely randomly.

Pair Corralation between IShares Self and Amplify Lithium

Given the investment horizon of 90 days iShares Self Driving EV is expected to generate 0.95 times more return on investment than Amplify Lithium. However, iShares Self Driving EV is 1.05 times less risky than Amplify Lithium. It trades about 0.06 of its potential returns per unit of risk. Amplify Lithium Battery is currently generating about -0.06 per unit of risk. If you would invest  2,919  in iShares Self Driving EV on December 2, 2024 and sell it today you would earn a total of  138.00  from holding iShares Self Driving EV or generate 4.73% return on investment over 90 days.

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

iShares Self Driving EV  vs.  Amplify Lithium Battery

iShares Self Driving

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Self Driving EV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Self is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Amplify Lithium Battery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amplify Lithium Battery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Amplify Lithium is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Self and Amplify Lithium

The main advantage of trading using opposite IShares Self and Amplify Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Self 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 iShares Self Driving EV 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.