Correlation Between Amazon and Beyond Oil
Can any of the company-specific risk be diversified away by investing in both Amazon and Beyond Oil 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 Beyond Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Beyond Oil, you can compare the effects of market volatilities on Amazon and Beyond Oil 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 Beyond Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Beyond Oil.
Diversification Opportunities for Amazon and Beyond Oil
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and Beyond is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Beyond Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Oil 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 Beyond Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Oil has no effect on the direction of Amazon i.e., Amazon and Beyond Oil go up and down completely randomly.
Pair Corralation between Amazon and Beyond Oil
Given the investment horizon of 90 days Amazon Inc is expected to generate 0.93 times more return on investment than Beyond Oil. However, Amazon Inc is 1.07 times less risky than Beyond Oil. It trades about 0.15 of its potential returns per unit of risk. Beyond Oil is currently generating about 0.13 per unit of risk. If you would invest 18,839 in Amazon Inc on August 28, 2024 and sell it today you would earn a total of 1,306 from holding Amazon Inc or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Beyond Oil
Performance |
| Timeline |
| Amazon Inc |
| Beyond Oil |
Amazon and Beyond Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Beyond Oil
The main advantage of trading using opposite Amazon and Beyond Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Beyond Oil 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 Beyond Oil will offset losses from the drop in Beyond Oil's long position.The idea behind Amazon Inc and Beyond Oil 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.| Beyond Oil vs. Titan Machinery | Beyond Oil vs. Everspin Technologies | Beyond Oil vs. Asbury Automotive Group | Beyond Oil vs. Simon Property Group |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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