Correlation Between Amazon and UBS ETF
Can any of the company-specific risk be diversified away by investing in both Amazon and UBS ETF 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 UBS ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and UBS ETF Gold, you can compare the effects of market volatilities on Amazon and UBS ETF 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 UBS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and UBS ETF.
Diversification Opportunities for Amazon and UBS ETF
Weak diversification
The 3 months correlation between Amazon and UBS is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and UBS ETF Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETF Gold 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 UBS ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETF Gold has no effect on the direction of Amazon i.e., Amazon and UBS ETF go up and down completely randomly.
Pair Corralation between Amazon and UBS ETF
Given the investment horizon of 90 days Amazon Inc is expected to generate 2.19 times more return on investment than UBS ETF. However, Amazon is 2.19 times more volatile than UBS ETF Gold. It trades about 0.09 of its potential returns per unit of risk. UBS ETF Gold is currently generating about 0.07 per unit of risk. If you would invest 9,812 in Amazon Inc on September 4, 2024 and sell it today you would earn a total of 11,259 from holding Amazon Inc or generate 114.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Amazon Inc vs. UBS ETF Gold
Performance |
| Timeline |
| Amazon Inc |
| UBS ETF Gold |
Amazon and UBS ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and UBS ETF
The main advantage of trading using opposite Amazon and UBS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, UBS ETF 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 UBS ETF will offset losses from the drop in UBS ETF's long position.The idea behind Amazon Inc and UBS ETF Gold 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.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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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