Correlation Between Beyond Meat and Amazon
Can any of the company-specific risk be diversified away by investing in both Beyond Meat 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 Beyond Meat and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beyond Meat and Amazon Inc, you can compare the effects of market volatilities on Beyond Meat 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 Beyond Meat with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beyond Meat and Amazon.
Diversification Opportunities for Beyond Meat and Amazon
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Beyond and Amazon is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Meat and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Beyond Meat 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 Beyond Meat 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 Beyond Meat i.e., Beyond Meat and Amazon go up and down completely randomly.
Pair Corralation between Beyond Meat and Amazon
Assuming the 90 days trading horizon Beyond Meat is expected to under-perform the Amazon. In addition to that, Beyond Meat is 3.31 times more volatile than Amazon Inc. It trades about -0.01 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.1 per unit of volatility. If you would invest 13,356 in Amazon Inc on August 29, 2024 and sell it today you would earn a total of 6,298 from holding Amazon Inc or generate 47.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beyond Meat vs. Amazon Inc
Performance |
| Timeline |
| Beyond Meat |
| Amazon Inc |
Beyond Meat and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beyond Meat and Amazon
The main advantage of trading using opposite Beyond Meat and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beyond Meat 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.| Beyond Meat vs. Apple Inc | Beyond Meat vs. Apple Inc | Beyond Meat vs. Apple Inc | Beyond Meat vs. Apple Inc |
| Amazon vs. Astral Foods Limited | Amazon vs. Beyond Meat | Amazon vs. TreeHouse Foods | Amazon vs. Austevoll Seafood ASA |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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