Correlation Between Amazon and MARUHA NICHIRO
Can any of the company-specific risk be diversified away by investing in both Amazon and MARUHA NICHIRO 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 MARUHA NICHIRO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and MARUHA NICHIRO, you can compare the effects of market volatilities on Amazon and MARUHA NICHIRO 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 MARUHA NICHIRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and MARUHA NICHIRO.
Diversification Opportunities for Amazon and MARUHA NICHIRO
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and MARUHA is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and MARUHA NICHIRO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARUHA NICHIRO 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 MARUHA NICHIRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARUHA NICHIRO has no effect on the direction of Amazon i.e., Amazon and MARUHA NICHIRO go up and down completely randomly.
Pair Corralation between Amazon and MARUHA NICHIRO
Assuming the 90 days trading horizon Amazon Inc is expected to generate 1.34 times more return on investment than MARUHA NICHIRO. However, Amazon is 1.34 times more volatile than MARUHA NICHIRO. It trades about 0.1 of its potential returns per unit of risk. MARUHA NICHIRO is currently generating about 0.02 per unit of risk. If you would invest 8,492 in Amazon Inc on August 30, 2024 and sell it today you would earn a total of 10,934 from holding Amazon Inc or generate 128.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. MARUHA NICHIRO
Performance |
| Timeline |
| Amazon Inc |
| MARUHA NICHIRO |
Amazon and MARUHA NICHIRO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and MARUHA NICHIRO
The main advantage of trading using opposite Amazon and MARUHA NICHIRO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, MARUHA NICHIRO 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 MARUHA NICHIRO will offset losses from the drop in MARUHA NICHIRO's long position.| Amazon vs. Apple Inc | Amazon vs. Apple Inc | Amazon vs. Superior Plus Corp | Amazon vs. SIVERS SEMICONDUCTORS AB |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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