Correlation Between Amazon and TAIYO YUDEN
Can any of the company-specific risk be diversified away by investing in both Amazon and TAIYO YUDEN 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 TAIYO YUDEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and TAIYO YUDEN, you can compare the effects of market volatilities on Amazon and TAIYO YUDEN 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 TAIYO YUDEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and TAIYO YUDEN.
Diversification Opportunities for Amazon and TAIYO YUDEN
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and TAIYO is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and TAIYO YUDEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAIYO YUDEN 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 TAIYO YUDEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAIYO YUDEN has no effect on the direction of Amazon i.e., Amazon and TAIYO YUDEN go up and down completely randomly.
Pair Corralation between Amazon and TAIYO YUDEN
Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.5 times more return on investment than TAIYO YUDEN. However, Amazon Inc is 2.0 times less risky than TAIYO YUDEN. It trades about 0.23 of its potential returns per unit of risk. TAIYO YUDEN is currently generating about -0.19 per unit of risk. If you would invest 16,652 in Amazon Inc on August 31, 2024 and sell it today you would earn a total of 3,048 from holding Amazon Inc or generate 18.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.78% |
| Values | Daily Returns |
Amazon Inc vs. TAIYO YUDEN
Performance |
| Timeline |
| Amazon Inc |
| TAIYO YUDEN |
Amazon and TAIYO YUDEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and TAIYO YUDEN
The main advantage of trading using opposite Amazon and TAIYO YUDEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, TAIYO YUDEN 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 TAIYO YUDEN will offset losses from the drop in TAIYO YUDEN's long position.| Amazon vs. REVO INSURANCE SPA | Amazon vs. United Insurance Holdings | Amazon vs. Ping An Insurance | Amazon vs. Direct Line Insurance |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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