Correlation Between Amazon and EDISON INTL
Can any of the company-specific risk be diversified away by investing in both Amazon and EDISON INTL 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 EDISON INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and EDISON INTL, you can compare the effects of market volatilities on Amazon and EDISON INTL 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 EDISON INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and EDISON INTL.
Diversification Opportunities for Amazon and EDISON INTL
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amazon and EDISON is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and EDISON INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDISON INTL 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 EDISON INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDISON INTL has no effect on the direction of Amazon i.e., Amazon and EDISON INTL go up and down completely randomly.
Pair Corralation between Amazon and EDISON INTL
If you would invest 21,495 in Amazon Inc on November 9, 2024 and sell it today you would earn a total of 1,390 from holding Amazon Inc or generate 6.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Amazon Inc vs. EDISON INTL
Performance |
| Timeline |
| Amazon Inc |
| EDISON INTL |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Amazon and EDISON INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and EDISON INTL
The main advantage of trading using opposite Amazon and EDISON INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, EDISON INTL 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 EDISON INTL will offset losses from the drop in EDISON INTL's long position.| Amazon vs. PLAYTIKA HOLDING DL 01 | Amazon vs. Playa Hotels Resorts | Amazon vs. HYATT HOTELS A | Amazon vs. ePlay Digital |
| EDISON INTL vs. Moneysupermarket Group PLC | EDISON INTL vs. RCS MediaGroup SpA | EDISON INTL vs. Cal Maine Foods | EDISON INTL vs. PENN Entertainment |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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