Correlation Between Global X and Amazon CDR
Can any of the company-specific risk be diversified away by investing in both Global X and Amazon CDR 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 Amazon CDR 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 Amazon CDR, you can compare the effects of market volatilities on Global X and Amazon CDR 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 Amazon CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Amazon CDR.
Diversification Opportunities for Global X and Amazon CDR
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Amazon is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Global X Lithium and Amazon CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon CDR 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 Amazon CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon CDR has no effect on the direction of Global X i.e., Global X and Amazon CDR go up and down completely randomly.
Pair Corralation between Global X and Amazon CDR
Assuming the 90 days trading horizon Global X Lithium is expected to under-perform the Amazon CDR. In addition to that, Global X is 1.15 times more volatile than Amazon CDR. It trades about -0.06 of its total potential returns per unit of risk. Amazon CDR is currently generating about 0.09 per unit of volatility. If you would invest 1,127 in Amazon CDR on September 4, 2024 and sell it today you would earn a total of 1,381 from holding Amazon CDR or generate 122.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Lithium vs. Amazon CDR
Performance |
| Timeline |
| Global X Lithium |
| Amazon CDR |
Global X and Amazon CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Amazon CDR
The main advantage of trading using opposite Global X and Amazon CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Amazon CDR 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 Amazon CDR will offset losses from the drop in Amazon CDR's long position.| Global X vs. Global X Equal | Global X vs. Global X Enhanced | Global X vs. Global X Gold | Global X vs. Global X Canadian |
| Amazon CDR vs. Ramp Metals | Amazon CDR vs. Exco Technologies Limited | Amazon CDR vs. NeXGold Mining Corp | Amazon CDR vs. American Hotel Income |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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