Correlation Between Amazon and AF2 Capital
Can any of the company-specific risk be diversified away by investing in both Amazon and AF2 Capital 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 AF2 Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and AF2 Capital Corp, you can compare the effects of market volatilities on Amazon and AF2 Capital 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 AF2 Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and AF2 Capital.
Diversification Opportunities for Amazon and AF2 Capital
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and AF2 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and AF2 Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AF2 Capital Corp 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 AF2 Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AF2 Capital Corp has no effect on the direction of Amazon i.e., Amazon and AF2 Capital go up and down completely randomly.
Pair Corralation between Amazon and AF2 Capital
Given the investment horizon of 90 days Amazon is expected to generate 1.37 times less return on investment than AF2 Capital. But when comparing it to its historical volatility, Amazon Inc is 4.93 times less risky than AF2 Capital. It trades about 0.08 of its potential returns per unit of risk. AF2 Capital Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 8.50 in AF2 Capital Corp on September 3, 2024 and sell it today you would lose (2.50) from holding AF2 Capital Corp or give up 29.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Amazon Inc vs. AF2 Capital Corp
Performance |
| Timeline |
| Amazon Inc |
| AF2 Capital Corp |
Amazon and AF2 Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and AF2 Capital
The main advantage of trading using opposite Amazon and AF2 Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, AF2 Capital 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 AF2 Capital will offset losses from the drop in AF2 Capital's long position.The idea behind Amazon Inc and AF2 Capital Corp 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.| AF2 Capital vs. IGM Financial | AF2 Capital vs. Highwood Asset Management | AF2 Capital vs. Definity Financial Corp | AF2 Capital vs. Brookfield Office Properties |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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