Correlation Between Amazon and Repsol SA
Can any of the company-specific risk be diversified away by investing in both Amazon and Repsol SA 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 Repsol SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Repsol SA, you can compare the effects of market volatilities on Amazon and Repsol SA 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 Repsol SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Repsol SA.
Diversification Opportunities for Amazon and Repsol SA
Good diversification
The 3 months correlation between Amazon and Repsol is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Repsol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol 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 Repsol SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol SA has no effect on the direction of Amazon i.e., Amazon and Repsol SA go up and down completely randomly.
Pair Corralation between Amazon and Repsol SA
If you would invest 160,000 in Amazon Inc on November 2, 2024 and sell it today you would earn a total of 32,000 from holding Amazon Inc or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.08% |
| Values | Daily Returns |
Amazon Inc vs. Repsol SA
Performance |
| Timeline |
| Amazon Inc |
| Repsol SA |
Amazon and Repsol SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Repsol SA
The main advantage of trading using opposite Amazon and Repsol SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Repsol SA 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 Repsol SA will offset losses from the drop in Repsol SA's long position.| Amazon vs. Alibaba Group Holding | Amazon vs. Alphabet Inc Class A CEDEAR | Amazon vs. Transportadora de Gas | Amazon vs. Agrometal SAI |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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