Correlation Between Amazon and Global Data
Can any of the company-specific risk be diversified away by investing in both Amazon and Global Data 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 Global Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Global Data Centre, you can compare the effects of market volatilities on Amazon and Global Data 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 Global Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Global Data.
Diversification Opportunities for Amazon and Global Data
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and Global is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Global Data Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Data Centre 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 Global Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Data Centre has no effect on the direction of Amazon i.e., Amazon and Global Data go up and down completely randomly.
Pair Corralation between Amazon and Global Data
Given the investment horizon of 90 days Amazon Inc is expected to generate 0.32 times more return on investment than Global Data. However, Amazon Inc is 3.11 times less risky than Global Data. It trades about 0.07 of its potential returns per unit of risk. Global Data Centre is currently generating about -0.02 per unit of risk. If you would invest 18,128 in Amazon Inc on September 3, 2024 and sell it today you would earn a total of 2,661 from holding Amazon Inc or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.66% |
| Values | Daily Returns |
Amazon Inc vs. Global Data Centre
Performance |
| Timeline |
| Amazon Inc |
| Global Data Centre |
Amazon and Global Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Global Data
The main advantage of trading using opposite Amazon and Global Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Global Data 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 Global Data will offset losses from the drop in Global Data's long position.The idea behind Amazon Inc and Global Data Centre 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.| Global Data vs. Audio Pixels Holdings | Global Data vs. Iodm | Global Data vs. Nsx | Global Data vs. TTG Fintech |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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