Correlation Between Global X and Amplify Lithium

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

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

Diversification Opportunities for Global X and Amplify Lithium

0.65

Correlation Coefficient

Global X  Amplify Lithium

Poor diversification

The 3 months correlation between Global and Amplify is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Global X Lithium 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 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 Lithium 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 Global X i.e., Global X and Amplify Lithium go up and down completely randomly.

Pair Corralation between Global X and Amplify Lithium

Considering the 90-day investment horizon Global X Lithium is expected to under-perform the Amplify Lithium. But the etf apears to be less risky and, when comparing its historical volatility, Global X Lithium is 1.2 times less risky than Amplify Lithium. The etf trades about -0.03 of its potential returns per unit of risk. The Amplify Lithium Battery is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  886.00  in Amplify Lithium Battery on December 28, 2024 and sell it today you would lose (13.00) from holding Amplify Lithium Battery or give up 1.47% of portfolio value over 90 days.

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

Global X Lithium  vs.  Amplify Lithium Battery

Global X Lithium

Risk-Adjusted Performance

Very Weak

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

The main advantage of trading using opposite Global X and Amplify Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X Lithium 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.