Correlation Between MT Bank and Amazon
Can any of the company-specific risk be diversified away by investing in both MT Bank and Amazon 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 MT Bank and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT Bank Corp and Amazon Inc, you can compare the effects of market volatilities on MT Bank and Amazon 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 MT Bank with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and Amazon.
Diversification Opportunities for MT Bank and Amazon
Modest diversification
The 3 months correlation between 0JW2 and Amazon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and MT Bank 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 MT Bank Corp are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of MT Bank i.e., MT Bank and Amazon go up and down completely randomly.
Pair Corralation between MT Bank and Amazon
Assuming the 90 days trading horizon MT Bank Corp is expected to under-perform the Amazon. But the stock apears to be less risky and, when comparing its historical volatility, MT Bank Corp is 1.51 times less risky than Amazon. The stock trades about -0.21 of its potential returns per unit of risk. The Amazon Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 19,450 in Amazon Inc on October 11, 2024 and sell it today you would earn a total of 2,700 from holding Amazon Inc or generate 13.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MT Bank Corp vs. Amazon Inc
Performance |
| Timeline |
| MT Bank Corp |
| Amazon Inc |
MT Bank and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MT Bank and Amazon
The main advantage of trading using opposite MT Bank and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank position performs unexpectedly, Amazon 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 will offset losses from the drop in Amazon's long position.| MT Bank vs. Liberty Media Corp | MT Bank vs. Eneraqua Technologies PLC | MT Bank vs. Catalyst Media Group | MT Bank vs. Sdiptech AB |
| Amazon vs. Panther Metals PLC | Amazon vs. Future Metals NL | Amazon vs. Westlake Chemical Corp | Amazon vs. MT Bank Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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