Correlation Between Amplify BlackSwan and Global X
Can any of the company-specific risk be diversified away by investing in both Amplify BlackSwan and Global X 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 Amplify BlackSwan and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amplify BlackSwan Growth and Global X NASDAQ, you can compare the effects of market volatilities on Amplify BlackSwan and Global X 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 Amplify BlackSwan with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify BlackSwan and Global X.
Diversification Opportunities for Amplify BlackSwan and Global X
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amplify and Global is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Amplify BlackSwan Growth and Global X NASDAQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X NASDAQ and Amplify BlackSwan 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 Amplify BlackSwan Growth are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X NASDAQ has no effect on the direction of Amplify BlackSwan i.e., Amplify BlackSwan and Global X go up and down completely randomly.
Pair Corralation between Amplify BlackSwan and Global X
Given the investment horizon of 90 days Amplify BlackSwan is expected to generate 1.54 times less return on investment than Global X. But when comparing it to its historical volatility, Amplify BlackSwan Growth is 1.1 times less risky than Global X. It trades about 0.07 of its potential returns per unit of risk. Global X NASDAQ is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,160 in Global X NASDAQ on August 30, 2024 and sell it today you would earn a total of 953.00 from holding Global X NASDAQ or generate 44.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amplify BlackSwan Growth vs. Global X NASDAQ
Performance |
| Timeline |
| Amplify BlackSwan Growth |
| Global X NASDAQ |
Amplify BlackSwan and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amplify BlackSwan and Global X
The main advantage of trading using opposite Amplify BlackSwan and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amplify BlackSwan position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.The idea behind Amplify BlackSwan Growth and Global X NASDAQ 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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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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