Correlation Between Amazon and Sony Group
Can any of the company-specific risk be diversified away by investing in both Amazon and Sony Group 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 Sony Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Sony Group, you can compare the effects of market volatilities on Amazon and Sony Group 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 Sony Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Sony Group.
Diversification Opportunities for Amazon and Sony Group
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Amazon and Sony is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Sony Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group 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 Sony Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group has no effect on the direction of Amazon i.e., Amazon and Sony Group go up and down completely randomly.
Pair Corralation between Amazon and Sony Group
Assuming the 90 days horizon Amazon Inc is expected to generate 0.96 times more return on investment than Sony Group. However, Amazon Inc is 1.04 times less risky than Sony Group. It trades about 0.09 of its potential returns per unit of risk. Sony Group is currently generating about 0.03 per unit of risk. If you would invest 8,408 in Amazon Inc on August 28, 2024 and sell it today you would earn a total of 10,512 from holding Amazon Inc or generate 125.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Sony Group
Performance |
| Timeline |
| Amazon Inc |
| Sony Group |
Amazon and Sony Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Sony Group
The main advantage of trading using opposite Amazon and Sony Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Sony Group 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 Sony Group will offset losses from the drop in Sony Group's long position.| Amazon vs. Gruppo Mutuionline SpA | Amazon vs. FAST RETAIL ADR | Amazon vs. MUTUIONLINE | Amazon vs. QURATE RETAIL INC |
| Sony Group vs. Amazon Inc | Sony Group vs. Microsoft | Sony Group vs. Tesla Inc | Sony Group vs. Alphabet Class A |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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