Correlation Between Amazon and BRAEMAR HOTELS
Can any of the company-specific risk be diversified away by investing in both Amazon and BRAEMAR HOTELS 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 Amazon and BRAEMAR HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and BRAEMAR HOTELS RES, you can compare the effects of market volatilities on Amazon and BRAEMAR HOTELS 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 Amazon with a short position of BRAEMAR HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and BRAEMAR HOTELS.
Diversification Opportunities for Amazon and BRAEMAR HOTELS
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amazon and BRAEMAR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and BRAEMAR HOTELS RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRAEMAR HOTELS RES and Amazon 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 Amazon Inc are associated (or correlated) with BRAEMAR HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRAEMAR HOTELS RES has no effect on the direction of Amazon i.e., Amazon and BRAEMAR HOTELS go up and down completely randomly.
Pair Corralation between Amazon and BRAEMAR HOTELS
Assuming the 90 days horizon Amazon is expected to generate 2.67 times less return on investment than BRAEMAR HOTELS. But when comparing it to its historical volatility, Amazon Inc is 3.3 times less risky than BRAEMAR HOTELS. It trades about 0.22 of its potential returns per unit of risk. BRAEMAR HOTELS RES is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 248.00 in BRAEMAR HOTELS RES on September 1, 2024 and sell it today you would earn a total of 62.00 from holding BRAEMAR HOTELS RES or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. BRAEMAR HOTELS RES
Performance |
| Timeline |
| Amazon Inc |
| BRAEMAR HOTELS RES |
Amazon and BRAEMAR HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and BRAEMAR HOTELS
The main advantage of trading using opposite Amazon and BRAEMAR HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, BRAEMAR HOTELS 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 BRAEMAR HOTELS will offset losses from the drop in BRAEMAR HOTELS's long position.| Amazon vs. SEKISUI CHEMICAL | Amazon vs. UNITED UTILITIES GR | Amazon vs. Algonquin Power Utilities | Amazon vs. Aluminum of |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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