Correlation Between Amazon and CALTAGIRONE EDITORE
Can any of the company-specific risk be diversified away by investing in both Amazon and CALTAGIRONE EDITORE 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 CALTAGIRONE EDITORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and CALTAGIRONE EDITORE, you can compare the effects of market volatilities on Amazon and CALTAGIRONE EDITORE 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 CALTAGIRONE EDITORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and CALTAGIRONE EDITORE.
Diversification Opportunities for Amazon and CALTAGIRONE EDITORE
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amazon and CALTAGIRONE is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and CALTAGIRONE EDITORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CALTAGIRONE EDITORE 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 CALTAGIRONE EDITORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CALTAGIRONE EDITORE has no effect on the direction of Amazon i.e., Amazon and CALTAGIRONE EDITORE go up and down completely randomly.
Pair Corralation between Amazon and CALTAGIRONE EDITORE
Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.83 times more return on investment than CALTAGIRONE EDITORE. However, Amazon Inc is 1.2 times less risky than CALTAGIRONE EDITORE. It trades about 0.11 of its potential returns per unit of risk. CALTAGIRONE EDITORE is currently generating about 0.05 per unit of risk. If you would invest 8,840 in Amazon Inc on October 11, 2024 and sell it today you would earn a total of 12,740 from holding Amazon Inc or generate 144.12% 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. CALTAGIRONE EDITORE
Performance |
| Timeline |
| Amazon Inc |
| CALTAGIRONE EDITORE |
Amazon and CALTAGIRONE EDITORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and CALTAGIRONE EDITORE
The main advantage of trading using opposite Amazon and CALTAGIRONE EDITORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, CALTAGIRONE EDITORE 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 CALTAGIRONE EDITORE will offset losses from the drop in CALTAGIRONE EDITORE's long position.The idea behind Amazon Inc and CALTAGIRONE EDITORE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CALTAGIRONE EDITORE vs. Apple Inc | CALTAGIRONE EDITORE vs. Apple Inc | CALTAGIRONE EDITORE vs. Apple Inc | CALTAGIRONE EDITORE vs. Apple Inc |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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