Correlation Between Amazon and Federated Short
Can any of the company-specific risk be diversified away by investing in both Amazon and Federated Short 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 Federated Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Federated Short Intermediate Duration, you can compare the effects of market volatilities on Amazon and Federated Short 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 Federated Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Federated Short.
Diversification Opportunities for Amazon and Federated Short
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Amazon and Federated is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Federated Short Intermediate D in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short Inte 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 Federated Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short Inte has no effect on the direction of Amazon i.e., Amazon and Federated Short go up and down completely randomly.
Pair Corralation between Amazon and Federated Short
Given the investment horizon of 90 days Amazon Inc is expected to generate 28.63 times more return on investment than Federated Short. However, Amazon is 28.63 times more volatile than Federated Short Intermediate Duration. It trades about 0.22 of its potential returns per unit of risk. Federated Short Intermediate Duration is currently generating about 0.38 per unit of risk. If you would invest 20,684 in Amazon Inc on September 12, 2024 and sell it today you would earn a total of 1,820 from holding Amazon Inc or generate 8.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Amazon Inc vs. Federated Short Intermediate D
Performance |
| Timeline |
| Amazon Inc |
| Federated Short Inte |
Amazon and Federated Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Federated Short
The main advantage of trading using opposite Amazon and Federated Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Federated Short 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 Federated Short will offset losses from the drop in Federated Short's long position.The idea behind Amazon Inc and Federated Short Intermediate Duration 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.| Federated Short vs. Federated Intermediate Municipal | Federated Short vs. Federated Ultrashort Bond | Federated Short vs. Federated Gov Sec | Federated Short vs. Federated Government Income |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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