Correlation Between Amazon and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Amazon and Sterling 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 Sterling 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 Sterling Capital Intermediate, you can compare the effects of market volatilities on Amazon and Sterling 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Sterling Capital.
Diversification Opportunities for Amazon and Sterling Capital
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and Sterling is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Sterling Capital Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Int 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Int has no effect on the direction of Amazon i.e., Amazon and Sterling Capital go up and down completely randomly.
Pair Corralation between Amazon and Sterling Capital
Given the investment horizon of 90 days Amazon Inc is expected to generate 7.69 times more return on investment than Sterling Capital. However, Amazon is 7.69 times more volatile than Sterling Capital Intermediate. It trades about 0.19 of its potential returns per unit of risk. Sterling Capital Intermediate is currently generating about 0.14 per unit of risk. If you would invest 19,578 in Amazon Inc on September 4, 2024 and sell it today you would earn a total of 1,493 from holding Amazon Inc or generate 7.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Amazon Inc vs. Sterling Capital Intermediate
Performance |
| Timeline |
| Amazon Inc |
| Sterling Capital Int |
Amazon and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Sterling Capital
The main advantage of trading using opposite Amazon and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Sterling 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.The idea behind Amazon Inc and Sterling Capital Intermediate 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.| Sterling Capital vs. Oppenheimer Gold Special | Sterling Capital vs. Invesco Gold Special | Sterling Capital vs. Global Gold Fund | Sterling Capital vs. Gamco Global Gold |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |