Correlation Between Amazon and REGAL HOTEL
Can any of the company-specific risk be diversified away by investing in both Amazon and REGAL HOTEL 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 REGAL HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and REGAL HOTEL INTL, you can compare the effects of market volatilities on Amazon and REGAL HOTEL 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 REGAL HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and REGAL HOTEL.
Diversification Opportunities for Amazon and REGAL HOTEL
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and REGAL is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and REGAL HOTEL INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL HOTEL 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 REGAL HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL HOTEL INTL has no effect on the direction of Amazon i.e., Amazon and REGAL HOTEL go up and down completely randomly.
Pair Corralation between Amazon and REGAL HOTEL
Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.62 times more return on investment than REGAL HOTEL. However, Amazon Inc is 1.61 times less risky than REGAL HOTEL. It trades about 0.18 of its potential returns per unit of risk. REGAL HOTEL INTL is currently generating about 0.08 per unit of risk. If you would invest 21,730 in Amazon Inc on November 4, 2024 and sell it today you would earn a total of 1,225 from holding Amazon Inc or generate 5.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Amazon Inc vs. REGAL HOTEL INTL
Performance |
Timeline |
Amazon Inc |
REGAL HOTEL INTL |
Amazon and REGAL HOTEL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amazon and REGAL HOTEL
The main advantage of trading using opposite Amazon and REGAL HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, REGAL HOTEL 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 REGAL HOTEL will offset losses from the drop in REGAL HOTEL's long position.Amazon vs. ADDUS HOMECARE | Amazon vs. HAVERTY FURNITURE A | Amazon vs. KENEDIX OFFICE INV | Amazon vs. DFS Furniture PLC |
REGAL HOTEL vs. Apple Inc | REGAL HOTEL vs. Apple Inc | REGAL HOTEL vs. Apple Inc | REGAL HOTEL 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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