Correlation Between Amazon and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both Amazon and BRIT AMER 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 BRIT AMER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and BRIT AMER TOBACCO, you can compare the effects of market volatilities on Amazon and BRIT AMER 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 BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and BRIT AMER.
Diversification Opportunities for Amazon and BRIT AMER
Poor diversification
The 3 months correlation between Amazon and BRIT is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO 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 BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of Amazon i.e., Amazon and BRIT AMER go up and down completely randomly.
Pair Corralation between Amazon and BRIT AMER
Assuming the 90 days trading horizon Amazon is expected to generate 1.39 times less return on investment than BRIT AMER. In addition to that, Amazon is 1.05 times more volatile than BRIT AMER TOBACCO. It trades about 0.16 of its total potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.23 per unit of volatility. If you would invest 3,564 in BRIT AMER TOBACCO on November 2, 2024 and sell it today you would earn a total of 235.00 from holding BRIT AMER TOBACCO or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| Amazon Inc |
| BRIT AMER TOBACCO |
Amazon and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and BRIT AMER
The main advantage of trading using opposite Amazon and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, BRIT AMER 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 BRIT AMER will offset losses from the drop in BRIT AMER's long position.| Amazon vs. Warner Music Group | Amazon vs. SPORTING | Amazon vs. SCIENCE IN SPORT | Amazon vs. Perseus Mining Limited |
| BRIT AMER vs. NAGOYA RAILROAD | BRIT AMER vs. TEXAS ROADHOUSE | BRIT AMER vs. BROADWIND ENRGY | BRIT AMER vs. SIEM OFFSHORE NEW |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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