Correlation Between Amazon and Amundi Nasdaq
Can any of the company-specific risk be diversified away by investing in both Amazon and Amundi Nasdaq 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 Amundi Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Amundi Nasdaq 100 UCITS, you can compare the effects of market volatilities on Amazon and Amundi Nasdaq 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 Amundi Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Amundi Nasdaq.
Diversification Opportunities for Amazon and Amundi Nasdaq
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amazon and Amundi is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Amundi Nasdaq 100 UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Nasdaq 100 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 Amundi Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Nasdaq 100 has no effect on the direction of Amazon i.e., Amazon and Amundi Nasdaq go up and down completely randomly.
Pair Corralation between Amazon and Amundi Nasdaq
Given the investment horizon of 90 days Amazon is expected to generate 1.0 times less return on investment than Amundi Nasdaq. In addition to that, Amazon is 1.71 times more volatile than Amundi Nasdaq 100 UCITS. It trades about 0.19 of its total potential returns per unit of risk. Amundi Nasdaq 100 UCITS is currently generating about 0.33 per unit of volatility. If you would invest 1,762,350 in Amundi Nasdaq 100 UCITS on September 4, 2024 and sell it today you would earn a total of 139,500 from holding Amundi Nasdaq 100 UCITS or generate 7.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Amundi Nasdaq 100 UCITS
Performance |
| Timeline |
| Amazon Inc |
| Amundi Nasdaq 100 |
Amazon and Amundi Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Amundi Nasdaq
The main advantage of trading using opposite Amazon and Amundi Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Amundi Nasdaq 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 Amundi Nasdaq will offset losses from the drop in Amundi Nasdaq's long position.The idea behind Amazon Inc and Amundi Nasdaq 100 UCITS 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.| Amundi Nasdaq vs. Amundi EUR High | Amundi Nasdaq vs. Amundi Index Solutions | Amundi Nasdaq vs. Amundi MSCI Pacific | Amundi Nasdaq vs. Amundi MSCI Europe |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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