Correlation Between Amazon and ISEQ 20
Can any of the company-specific risk be diversified away by investing in both Amazon and ISEQ 20 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 ISEQ 20 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and ISEQ 20 Price, you can compare the effects of market volatilities on Amazon and ISEQ 20 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 ISEQ 20. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and ISEQ 20.
Diversification Opportunities for Amazon and ISEQ 20
Very good diversification
The 3 months correlation between Amazon and ISEQ is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and ISEQ 20 Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISEQ 20 Price 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 ISEQ 20. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISEQ 20 Price has no effect on the direction of Amazon i.e., Amazon and ISEQ 20 go up and down completely randomly.
Pair Corralation between Amazon and ISEQ 20
Given the investment horizon of 90 days Amazon Inc is expected to generate 1.95 times more return on investment than ISEQ 20. However, Amazon is 1.95 times more volatile than ISEQ 20 Price. It trades about 0.11 of its potential returns per unit of risk. ISEQ 20 Price is currently generating about 0.06 per unit of risk. If you would invest 8,379 in Amazon Inc on September 12, 2024 and sell it today you would earn a total of 14,125 from holding Amazon Inc or generate 168.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Amazon Inc vs. ISEQ 20 Price
Performance |
| Timeline |
Amazon and ISEQ 20 Volatility Contrast
Predicted Return Density |
| Returns |
Amazon Inc
Pair trading matchups for Amazon
ISEQ 20 Price
Pair trading matchups for ISEQ 20
Pair Trading with Amazon and ISEQ 20
The main advantage of trading using opposite Amazon and ISEQ 20 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, ISEQ 20 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 ISEQ 20 will offset losses from the drop in ISEQ 20's long position.The idea behind Amazon Inc and ISEQ 20 Price 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.| ISEQ 20 vs. Cairn Homes PLC | ISEQ 20 vs. FD Technologies PLC | ISEQ 20 vs. Dalata Hotel Group | ISEQ 20 vs. Donegal Investment Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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