Correlation Between Amazon and BROADWIND ENRGY
Can any of the company-specific risk be diversified away by investing in both Amazon and BROADWIND ENRGY 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 BROADWIND ENRGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and BROADWIND ENRGY, you can compare the effects of market volatilities on Amazon and BROADWIND ENRGY 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 BROADWIND ENRGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and BROADWIND ENRGY.
Diversification Opportunities for Amazon and BROADWIND ENRGY
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and BROADWIND is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and BROADWIND ENRGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADWIND ENRGY 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 BROADWIND ENRGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADWIND ENRGY has no effect on the direction of Amazon i.e., Amazon and BROADWIND ENRGY go up and down completely randomly.
Pair Corralation between Amazon and BROADWIND ENRGY
Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.41 times more return on investment than BROADWIND ENRGY. However, Amazon Inc is 2.43 times less risky than BROADWIND ENRGY. It trades about 0.23 of its potential returns per unit of risk. BROADWIND ENRGY is currently generating about 0.03 per unit of risk. If you would invest 17,676 in Amazon Inc on September 1, 2024 and sell it today you would earn a total of 1,864 from holding Amazon Inc or generate 10.55% 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. BROADWIND ENRGY
Performance |
| Timeline |
| Amazon Inc |
| BROADWIND ENRGY |
Amazon and BROADWIND ENRGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and BROADWIND ENRGY
The main advantage of trading using opposite Amazon and BROADWIND ENRGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, BROADWIND ENRGY 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 BROADWIND ENRGY will offset losses from the drop in BROADWIND ENRGY's long position.| Amazon vs. MOLSON RS BEVERAGE | Amazon vs. Thai Beverage Public | Amazon vs. Molson Coors Beverage | Amazon vs. PLAY2CHILL SA ZY |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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