Correlation Between Ametek and Global X

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

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

Diversification Opportunities for Ametek and Global X

0.88

Correlation Coefficient

Ametek  Global X

Very poor diversification

The 3 months correlation between Ametek and Global is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ametek Inc and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and Ametek 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 Ametek Inc 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 Funds has no effect on the direction of Ametek i.e., Ametek and Global X go up and down completely randomly.

Pair Corralation between Ametek and Global X

Considering the 90-day investment horizon Ametek is expected to generate 1.11 times less return on investment than Global X. In addition to that, Ametek is 1.3 times more volatile than Global X Funds. It trades about 0.08 of its total potential returns per unit of risk. Global X Funds is currently generating about 0.12 per unit of volatility. If you would invest  2,497  in Global X Funds on January 24, 2024 and sell it today you would earn a total of  511.00  from holding Global X Funds or generate 20.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	68.86%
Values	Daily Returns

Ametek Inc  vs.  Global X Funds

Ametek Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ametek Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal primary indicators, Ametek may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Global X Funds

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Ametek and Global X

The main advantage of trading using opposite Ametek and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ametek 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 Ametek Inc and Global X Funds 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.