Correlation Between Amazon and LEGACY IRON
Can any of the company-specific risk be diversified away by investing in both Amazon and LEGACY IRON 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 LEGACY IRON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and LEGACY IRON ORE, you can compare the effects of market volatilities on Amazon and LEGACY IRON 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 LEGACY IRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and LEGACY IRON.
Diversification Opportunities for Amazon and LEGACY IRON
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and LEGACY is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and LEGACY IRON ORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEGACY IRON ORE 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 LEGACY IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEGACY IRON ORE has no effect on the direction of Amazon i.e., Amazon and LEGACY IRON go up and down completely randomly.
Pair Corralation between Amazon and LEGACY IRON
If you would invest 17,516 in Amazon Inc on August 28, 2024 and sell it today you would earn a total of 1,590 from holding Amazon Inc or generate 9.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. LEGACY IRON ORE
Performance |
| Timeline |
| Amazon Inc |
| LEGACY IRON ORE |
Amazon and LEGACY IRON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and LEGACY IRON
The main advantage of trading using opposite Amazon and LEGACY IRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, LEGACY IRON 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 LEGACY IRON will offset losses from the drop in LEGACY IRON's long position.| Amazon vs. Big 5 Sporting | Amazon vs. Gold Road Resources | Amazon vs. Fukuyama Transporting Co | Amazon vs. Gaztransport Technigaz SA |
| LEGACY IRON vs. Apple Inc | LEGACY IRON vs. Apple Inc | LEGACY IRON vs. Apple Inc | LEGACY IRON vs. Microsoft |
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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