Correlation Between Amazon and Monument Circle
Can any of the company-specific risk be diversified away by investing in both Amazon and Monument Circle 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 Monument Circle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Monument Circle Acquisition, you can compare the effects of market volatilities on Amazon and Monument Circle 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 Monument Circle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Monument Circle.
Diversification Opportunities for Amazon and Monument Circle
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and Monument is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Monument Circle Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monument Circle Acqu 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 Monument Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monument Circle Acqu has no effect on the direction of Amazon i.e., Amazon and Monument Circle go up and down completely randomly.
Pair Corralation between Amazon and Monument Circle
If you would invest 18,839 in Amazon Inc on August 28, 2024 and sell it today you would earn a total of 1,306 from holding Amazon Inc or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
Amazon Inc vs. Monument Circle Acquisition
Performance |
| Timeline |
| Amazon Inc |
| Monument Circle Acqu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amazon and Monument Circle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Monument Circle
The main advantage of trading using opposite Amazon and Monument Circle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Monument Circle 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 Monument Circle will offset losses from the drop in Monument Circle's long position.The idea behind Amazon Inc and Monument Circle Acquisition 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.| Monument Circle vs. ICC Holdings | Monument Circle vs. QBE Insurance Group | Monument Circle vs. European Wax Center | Monument Circle vs. GoHealth |
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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