Correlation Between Amazon and El Puerto

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Can any of the company-specific risk be diversified away by investing in both Amazon and El Puerto 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 El Puerto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and El Puerto de, you can compare the effects of market volatilities on Amazon and El Puerto 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 El Puerto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and El Puerto.

Diversification Opportunities for Amazon and El Puerto

-0.79
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Amazon and LIVEPOLC-1 is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and El Puerto de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Puerto de 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 El Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Puerto de has no effect on the direction of Amazon i.e., Amazon and El Puerto go up and down completely randomly.

Pair Corralation between Amazon and El Puerto

Assuming the 90 days trading horizon Amazon Inc is expected to generate 1.92 times more return on investment than El Puerto. However, Amazon is 1.92 times more volatile than El Puerto de. It trades about 0.11 of its potential returns per unit of risk. El Puerto de is currently generating about -0.03 per unit of risk. If you would invest  455,565  in Amazon Inc on October 20, 2024 and sell it today you would earn a total of  14,011  from holding Amazon Inc or generate 3.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  El Puerto de

 Performance 
       Timeline  
Amazon Inc 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Amazon showed solid returns over the last few months and may actually be approaching a breakup point.
El Puerto de 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days El Puerto de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon and El Puerto Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and El Puerto

The main advantage of trading using opposite Amazon and El Puerto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, El Puerto 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 El Puerto will offset losses from the drop in El Puerto's long position.
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The idea behind Amazon Inc and El Puerto de pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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