Correlation Between Amazon and Hornbach Holding
Can any of the company-specific risk be diversified away by investing in both Amazon and Hornbach Holding 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 Hornbach Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Hornbach Holding VZO, you can compare the effects of market volatilities on Amazon and Hornbach Holding 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 Hornbach Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Hornbach Holding.
Diversification Opportunities for Amazon and Hornbach Holding
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Amazon and Hornbach is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Hornbach Holding VZO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hornbach Holding VZO 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 Hornbach Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hornbach Holding VZO has no effect on the direction of Amazon i.e., Amazon and Hornbach Holding go up and down completely randomly.
Pair Corralation between Amazon and Hornbach Holding
Given the investment horizon of 90 days Amazon Inc is expected to generate 1.49 times more return on investment than Hornbach Holding. However, Amazon is 1.49 times more volatile than Hornbach Holding VZO. It trades about 0.19 of its potential returns per unit of risk. Hornbach Holding VZO is currently generating about 0.1 per unit of risk. If you would invest 16,102 in Amazon Inc on September 4, 2024 and sell it today you would earn a total of 4,969 from holding Amazon Inc or generate 30.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.84% |
| Values | Daily Returns |
Amazon Inc vs. Hornbach Holding VZO
Performance |
| Timeline |
| Amazon Inc |
| Hornbach Holding VZO |
Amazon and Hornbach Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Hornbach Holding
The main advantage of trading using opposite Amazon and Hornbach Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Hornbach Holding 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 Hornbach Holding will offset losses from the drop in Hornbach Holding's long position.The idea behind Amazon Inc and Hornbach Holding VZO 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.| Hornbach Holding vs. Gol Intelligent Airlines | Hornbach Holding vs. FANDIFI TECHNOLOGY P | Hornbach Holding vs. SMA Solar Technology | Hornbach Holding vs. Check Point Software |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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