Correlation Between Albertsons Companies and AMAZON

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Can any of the company-specific risk be diversified away by investing in both Albertsons Companies 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 Albertsons Companies and AMAZON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albertsons Companies and AMAZON INC 3875, you can compare the effects of market volatilities on Albertsons Companies 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 Albertsons Companies with a short position of AMAZON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albertsons Companies and AMAZON.

Diversification Opportunities for Albertsons Companies and AMAZON

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Albertsons and AMAZON is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Albertsons Companies and AMAZON INC 3875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAZON INC 3875 and Albertsons Companies 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 Albertsons Companies 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 3875 has no effect on the direction of Albertsons Companies i.e., Albertsons Companies and AMAZON go up and down completely randomly.

Pair Corralation between Albertsons Companies and AMAZON

Considering the 90-day investment horizon Albertsons Companies is expected to under-perform the AMAZON. In addition to that, Albertsons Companies is 1.76 times more volatile than AMAZON INC 3875. It trades about -0.01 of its total potential returns per unit of risk. AMAZON INC 3875 is currently generating about -0.01 per unit of volatility. If you would invest  9,118  in AMAZON INC 3875 on November 9, 2024 and sell it today you would lose (212.00) from holding AMAZON INC 3875 or give up 2.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Albertsons Companies  vs.  AMAZON INC 3875

 Performance 
       Timeline  
Albertsons Companies 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, Albertsons Companies may actually be approaching a critical reversion point that can send shares even higher in March 2025.
AMAZON INC 3875 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days AMAZON INC 3875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AMAZON is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Albertsons Companies and AMAZON Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Albertsons Companies and AMAZON

The main advantage of trading using opposite Albertsons Companies and AMAZON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albertsons Companies 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.
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The idea behind Albertsons Companies and AMAZON INC 3875 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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