Correlation Between Amazon and AMP
Can any of the company-specific risk be diversified away by investing in both Amazon and AMP 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 AMP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and AMP, you can compare the effects of market volatilities on Amazon and AMP 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 AMP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and AMP.
Diversification Opportunities for Amazon and AMP
Very poor diversification
The 3 months correlation between Amazon and AMP is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and AMP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP 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 AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP has no effect on the direction of Amazon i.e., Amazon and AMP go up and down completely randomly.
Pair Corralation between Amazon and AMP
Assuming the 90 days trading horizon Amazon is expected to generate 1.62 times less return on investment than AMP. But when comparing it to its historical volatility, Amazon Inc is 1.43 times less risky than AMP. It trades about 0.09 of its potential returns per unit of risk. AMP is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 53.00 in AMP on September 2, 2024 and sell it today you would earn a total of 41.00 from holding AMP or generate 77.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. AMP
Performance |
| Timeline |
| Amazon Inc |
| AMP |
Amazon and AMP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and AMP
The main advantage of trading using opposite Amazon and AMP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, AMP 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 AMP will offset losses from the drop in AMP's long position.| Amazon vs. Richardson Electronics | Amazon vs. Mobilezone Holding AG | Amazon vs. METHODE ELECTRONICS | Amazon vs. Arrow Electronics |
| AMP vs. SIVERS SEMICONDUCTORS AB | AMP vs. Darden Restaurants | AMP vs. Reliance Steel Aluminum | AMP vs. Q2M Managementberatung AG |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |