Correlation Between Amazon and Neinor Homes
Can any of the company-specific risk be diversified away by investing in both Amazon and Neinor Homes 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 Neinor Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Neinor Homes SA, you can compare the effects of market volatilities on Amazon and Neinor Homes 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 Neinor Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Neinor Homes.
Diversification Opportunities for Amazon and Neinor Homes
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amazon and Neinor is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Neinor Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neinor Homes SA 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 Neinor Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neinor Homes SA has no effect on the direction of Amazon i.e., Amazon and Neinor Homes go up and down completely randomly.
Pair Corralation between Amazon and Neinor Homes
Assuming the 90 days trading horizon Amazon Inc is expected to generate 1.89 times more return on investment than Neinor Homes. However, Amazon is 1.89 times more volatile than Neinor Homes SA. It trades about 0.19 of its potential returns per unit of risk. Neinor Homes SA is currently generating about 0.22 per unit of risk. If you would invest 17,274 in Amazon Inc on August 25, 2024 and sell it today you would earn a total of 1,726 from holding Amazon Inc or generate 9.99% 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. Neinor Homes SA
Performance |
| Timeline |
| Amazon Inc |
| Neinor Homes SA |
Amazon and Neinor Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Neinor Homes
The main advantage of trading using opposite Amazon and Neinor Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Neinor Homes 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 Neinor Homes will offset losses from the drop in Neinor Homes' long position.| Amazon vs. Neinor Homes SA | Amazon vs. STMicroelectronics NV | Amazon vs. CENTURIA OFFICE REIT | Amazon vs. Autohome ADR |
| Neinor Homes vs. Apple Inc | Neinor Homes vs. Apple Inc | Neinor Homes vs. Apple Inc | Neinor Homes 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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