Correlation Between Amazon and MetalsGrove Mining
Can any of the company-specific risk be diversified away by investing in both Amazon and MetalsGrove Mining 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 MetalsGrove Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and MetalsGrove Mining, you can compare the effects of market volatilities on Amazon and MetalsGrove Mining 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 MetalsGrove Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and MetalsGrove Mining.
Diversification Opportunities for Amazon and MetalsGrove Mining
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and MetalsGrove is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and MetalsGrove Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetalsGrove Mining 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 MetalsGrove Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetalsGrove Mining has no effect on the direction of Amazon i.e., Amazon and MetalsGrove Mining go up and down completely randomly.
Pair Corralation between Amazon and MetalsGrove Mining
Given the investment horizon of 90 days Amazon Inc is expected to generate 0.29 times more return on investment than MetalsGrove Mining. However, Amazon Inc is 3.4 times less risky than MetalsGrove Mining. It trades about 0.1 of its potential returns per unit of risk. MetalsGrove Mining is currently generating about 0.0 per unit of risk. If you would invest 9,158 in Amazon Inc on September 4, 2024 and sell it today you would earn a total of 11,913 from holding Amazon Inc or generate 130.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Amazon Inc vs. MetalsGrove Mining
Performance |
| Timeline |
| Amazon Inc |
| MetalsGrove Mining |
Amazon and MetalsGrove Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and MetalsGrove Mining
The main advantage of trading using opposite Amazon and MetalsGrove Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, MetalsGrove Mining 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 MetalsGrove Mining will offset losses from the drop in MetalsGrove Mining's long position.The idea behind Amazon Inc and MetalsGrove Mining 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.| MetalsGrove Mining vs. Northern Star Resources | MetalsGrove Mining vs. Evolution Mining | MetalsGrove Mining vs. Bluescope Steel | MetalsGrove Mining vs. Sandfire Resources NL |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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