Correlation Between Amazon and PEEL MINING
Can any of the company-specific risk be diversified away by investing in both Amazon and PEEL MINING 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 PEEL MINING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and PEEL MINING, you can compare the effects of market volatilities on Amazon and PEEL MINING 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 PEEL MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and PEEL MINING.
Diversification Opportunities for Amazon and PEEL MINING
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amazon and PEEL is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and PEEL MINING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEEL MINING 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 PEEL MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEEL MINING has no effect on the direction of Amazon i.e., Amazon and PEEL MINING go up and down completely randomly.
Pair Corralation between Amazon and PEEL MINING
Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.56 times more return on investment than PEEL MINING. However, Amazon Inc is 1.79 times less risky than PEEL MINING. It trades about 0.16 of its potential returns per unit of risk. PEEL MINING is currently generating about 0.04 per unit of risk. If you would invest 18,260 in Amazon Inc on September 2, 2024 and sell it today you would earn a total of 1,280 from holding Amazon Inc or generate 7.01% 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. PEEL MINING
Performance |
| Timeline |
| Amazon Inc |
| PEEL MINING |
Amazon and PEEL MINING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and PEEL MINING
The main advantage of trading using opposite Amazon and PEEL MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, PEEL MINING 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 PEEL MINING will offset losses from the drop in PEEL MINING's long position.| Amazon vs. Richardson Electronics | Amazon vs. Mobilezone Holding AG | Amazon vs. METHODE ELECTRONICS | Amazon vs. Arrow Electronics |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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