Correlation Between Amazon and Enel SpA
Can any of the company-specific risk be diversified away by investing in both Amazon and Enel SpA 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 Enel SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Enel SpA, you can compare the effects of market volatilities on Amazon and Enel SpA 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 Enel SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Enel SpA.
Diversification Opportunities for Amazon and Enel SpA
Excellent diversification
The 3 months correlation between Amazon and Enel is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Enel SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel SpA 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 Enel SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel SpA has no effect on the direction of Amazon i.e., Amazon and Enel SpA go up and down completely randomly.
Pair Corralation between Amazon and Enel SpA
Assuming the 90 days trading horizon Amazon Inc is expected to generate 1.67 times more return on investment than Enel SpA. However, Amazon is 1.67 times more volatile than Enel SpA. It trades about 0.09 of its potential returns per unit of risk. Enel SpA is currently generating about 0.08 per unit of risk. If you would invest 8,793 in Amazon Inc on September 3, 2024 and sell it today you would earn a total of 10,753 from holding Amazon Inc or generate 122.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Enel SpA
Performance |
| Timeline |
| Amazon Inc |
| Enel SpA |
Amazon and Enel SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Enel SpA
The main advantage of trading using opposite Amazon and Enel SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Enel SpA 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 Enel SpA will offset losses from the drop in Enel SpA's long position.| Amazon vs. Perseus Mining Limited | Amazon vs. Ming Le Sports | Amazon vs. MCEWEN MINING INC | Amazon vs. Gaztransport Technigaz SA |
| Enel SpA vs. Pembina Pipeline Corp | Enel SpA vs. CN MODERN DAIRY | Enel SpA vs. American Eagle Outfitters | Enel SpA vs. Tyson Foods |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |