Correlation Between Amazon and EURASIAN MINERALS
Can any of the company-specific risk be diversified away by investing in both Amazon and EURASIAN MINERALS 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 EURASIAN MINERALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and EURASIAN MINERALS, you can compare the effects of market volatilities on Amazon and EURASIAN MINERALS 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 EURASIAN MINERALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and EURASIAN MINERALS.
Diversification Opportunities for Amazon and EURASIAN MINERALS
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and EURASIAN is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and EURASIAN MINERALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EURASIAN MINERALS 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 EURASIAN MINERALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EURASIAN MINERALS has no effect on the direction of Amazon i.e., Amazon and EURASIAN MINERALS go up and down completely randomly.
Pair Corralation between Amazon and EURASIAN MINERALS
Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.92 times more return on investment than EURASIAN MINERALS. However, Amazon Inc is 1.09 times less risky than EURASIAN MINERALS. It trades about 0.19 of its potential returns per unit of risk. EURASIAN MINERALS is currently generating about -0.04 per unit of risk. If you would invest 21,335 in Amazon Inc on October 29, 2024 and sell it today you would earn a total of 940.00 from holding Amazon Inc or generate 4.41% 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. EURASIAN MINERALS
Performance |
| Timeline |
| Amazon Inc |
| EURASIAN MINERALS |
Amazon and EURASIAN MINERALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and EURASIAN MINERALS
The main advantage of trading using opposite Amazon and EURASIAN MINERALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, EURASIAN MINERALS 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 EURASIAN MINERALS will offset losses from the drop in EURASIAN MINERALS's long position.| Amazon vs. Kingdee International Software | Amazon vs. AECOM TECHNOLOGY | Amazon vs. FIREWEED METALS P | Amazon vs. Micron Technology |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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