Correlation Between Amazon and Ebix
Can any of the company-specific risk be diversified away by investing in both Amazon and Ebix 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 Ebix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Ebix Inc, you can compare the effects of market volatilities on Amazon and Ebix 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 Ebix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Ebix.
Diversification Opportunities for Amazon and Ebix
Very poor diversification
The 3 months correlation between Amazon and Ebix is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Ebix Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebix Inc 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 Ebix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebix Inc has no effect on the direction of Amazon i.e., Amazon and Ebix go up and down completely randomly.
Pair Corralation between Amazon and Ebix
Given the investment horizon of 90 days Amazon is expected to generate 1.5 times less return on investment than Ebix. But when comparing it to its historical volatility, Amazon Inc is 2.36 times less risky than Ebix. It trades about 0.11 of its potential returns per unit of risk. Ebix Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,953 in Ebix Inc on September 12, 2024 and sell it today you would earn a total of 767.00 from holding Ebix Inc or generate 39.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 29.49% |
| Values | Daily Returns |
Amazon Inc vs. Ebix Inc
Performance |
| Timeline |
| Amazon Inc |
| Ebix Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amazon and Ebix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Ebix
The main advantage of trading using opposite Amazon and Ebix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Ebix 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 Ebix will offset losses from the drop in Ebix's long position.The idea behind Amazon Inc and Ebix Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |