Correlation Between Gaming and Amazon
Can any of the company-specific risk be diversified away by investing in both Gaming 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 Gaming and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming and Leisure and Amazon Inc, you can compare the effects of market volatilities on Gaming 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 Gaming with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming and Amazon.
Diversification Opportunities for Gaming and Amazon
Good diversification
The 3 months correlation between Gaming and Amazon is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Gaming and Leisure and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Gaming 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 Gaming and Leisure 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 Gaming i.e., Gaming and Amazon go up and down completely randomly.
Pair Corralation between Gaming and Amazon
Assuming the 90 days horizon Gaming and Leisure is expected to under-perform the Amazon. In addition to that, Gaming is 1.29 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 0.18 per unit of volatility. If you would invest 21,730 in Amazon Inc on November 4, 2024 and sell it today you would earn a total of 1,225 from holding Amazon Inc or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gaming and Leisure vs. Amazon Inc
Performance |
| Timeline |
| Gaming and Leisure |
| Amazon Inc |
Gaming and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming and Amazon
The main advantage of trading using opposite Gaming and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming 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.| Gaming vs. JSC Halyk bank | Gaming vs. Highlight Communications AG | Gaming vs. Ribbon Communications | Gaming vs. Verizon Communications |
| Amazon vs. ADDUS HOMECARE | Amazon vs. HAVERTY FURNITURE A | Amazon vs. KENEDIX OFFICE INV | Amazon vs. DFS Furniture PLC |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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