Correlation Between Invesco Water and Amplify Lithium
Can any of the company-specific risk be diversified away by investing in both Invesco Water 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 Invesco Water and Amplify Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Water Resources and Amplify Lithium Battery, you can compare the effects of market volatilities on Invesco Water 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 Invesco Water with a short position of Amplify Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Water and Amplify Lithium.
Diversification Opportunities for Invesco Water and Amplify Lithium
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Amplify is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Water Resources 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 Invesco Water 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 Invesco Water Resources 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 Invesco Water i.e., Invesco Water and Amplify Lithium go up and down completely randomly.
Pair Corralation between Invesco Water and Amplify Lithium
Considering the 90-day investment horizon Invesco Water Resources is expected to generate 0.58 times more return on investment than Amplify Lithium. However, Invesco Water Resources is 1.71 times less risky than Amplify Lithium. It trades about 0.08 of its potential returns per unit of risk. Amplify Lithium Battery is currently generating about -0.04 per unit of risk. If you would invest 5,425 in Invesco Water Resources on August 31, 2024 and sell it today you would earn a total of 1,729 from holding Invesco Water Resources or generate 31.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Water Resources vs. Amplify Lithium Battery
Performance |
| Timeline |
| Invesco Water Resources |
| Amplify Lithium Battery |
Invesco Water and Amplify Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Water and Amplify Lithium
The main advantage of trading using opposite Invesco Water and Amplify Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Water 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.| Invesco Water vs. Invesco SP Global | Invesco Water vs. Invesco Global Water | Invesco Water vs. First Trust Water | Invesco Water vs. Invesco WilderHill Clean |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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