Correlation Between Amazon and Uber Technologies
Can any of the company-specific risk be diversified away by investing in both Amazon and Uber Technologies 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 Uber Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Uber Technologies, you can compare the effects of market volatilities on Amazon and Uber Technologies 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 Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Uber Technologies.
Diversification Opportunities for Amazon and Uber Technologies
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and Uber is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Amazon i.e., Amazon and Uber Technologies go up and down completely randomly.
Pair Corralation between Amazon and Uber Technologies
Assuming the 90 days horizon Amazon Inc is expected to generate 0.66 times more return on investment than Uber Technologies. However, Amazon Inc is 1.51 times less risky than Uber Technologies. It trades about 0.08 of its potential returns per unit of risk. Uber Technologies is currently generating about -0.02 per unit of risk. If you would invest 18,188 in Amazon Inc on September 24, 2024 and sell it today you would earn a total of 3,297 from holding Amazon Inc or generate 18.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Uber Technologies
Performance |
| Timeline |
| Amazon Inc |
| Uber Technologies |
Amazon and Uber Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Uber Technologies
The main advantage of trading using opposite Amazon and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Uber Technologies 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position.The idea behind Amazon Inc and Uber Technologies 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.| Uber Technologies vs. BW OFFSHORE LTD | Uber Technologies vs. Jacquet Metal Service | Uber Technologies vs. WT OFFSHORE | Uber Technologies vs. ADRIATIC METALS LS 013355 |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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