Correlation Between Amazon and Cowen
Can any of the company-specific risk be diversified away by investing in both Amazon and Cowen 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 Cowen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Cowen Group, you can compare the effects of market volatilities on Amazon and Cowen 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 Cowen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Cowen.
Diversification Opportunities for Amazon and Cowen
Poor diversification
The 3 months correlation between Amazon and Cowen is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Cowen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cowen Group 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 Cowen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cowen Group has no effect on the direction of Amazon i.e., Amazon and Cowen go up and down completely randomly.
Pair Corralation between Amazon and Cowen
If you would invest 18,196 in Amazon Inc on September 3, 2024 and sell it today you would earn a total of 2,593 from holding Amazon Inc or generate 14.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 2.38% |
| Values | Daily Returns |
Amazon Inc vs. Cowen Group
Performance |
| Timeline |
| Amazon Inc |
| Cowen Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amazon and Cowen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Cowen
The main advantage of trading using opposite Amazon and Cowen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Cowen 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 Cowen will offset losses from the drop in Cowen's long position.The idea behind Amazon Inc and Cowen Group 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.| Cowen vs. Ihuman Inc | Cowen vs. Where Food Comes | Cowen vs. Cadence Design Systems | Cowen vs. Zane Interactive Publishing |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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