Correlation Between Amazon and Marksmen Energy
Can any of the company-specific risk be diversified away by investing in both Amazon and Marksmen Energy 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 Marksmen Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Marksmen Energy, you can compare the effects of market volatilities on Amazon and Marksmen Energy 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 Marksmen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Marksmen Energy.
Diversification Opportunities for Amazon and Marksmen Energy
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and Marksmen is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Marksmen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marksmen Energy 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 Marksmen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marksmen Energy has no effect on the direction of Amazon i.e., Amazon and Marksmen Energy go up and down completely randomly.
Pair Corralation between Amazon and Marksmen Energy
Given the investment horizon of 90 days Amazon is expected to generate 6.92 times less return on investment than Marksmen Energy. But when comparing it to its historical volatility, Amazon Inc is 15.13 times less risky than Marksmen Energy. It trades about 0.24 of its potential returns per unit of risk. Marksmen Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.36 in Marksmen Energy on September 1, 2024 and sell it today you would lose (0.02) from holding Marksmen Energy or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Amazon Inc vs. Marksmen Energy
Performance |
| Timeline |
| Amazon Inc |
| Marksmen Energy |
Amazon and Marksmen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Marksmen Energy
The main advantage of trading using opposite Amazon and Marksmen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Marksmen Energy 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 Marksmen Energy will offset losses from the drop in Marksmen Energy's long position.The idea behind Amazon Inc and Marksmen Energy 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.| Marksmen Energy vs. Permian Resources | Marksmen Energy vs. Devon Energy | Marksmen Energy vs. EOG Resources | Marksmen Energy vs. Coterra Energy |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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