Correlation Between Amazon and Neon Bloom
Can any of the company-specific risk be diversified away by investing in both Amazon and Neon Bloom 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 Neon Bloom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Neon Bloom, you can compare the effects of market volatilities on Amazon and Neon Bloom 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 Neon Bloom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Neon Bloom.
Diversification Opportunities for Amazon and Neon Bloom
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and Neon is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Neon Bloom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neon Bloom 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 Neon Bloom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neon Bloom has no effect on the direction of Amazon i.e., Amazon and Neon Bloom go up and down completely randomly.
Pair Corralation between Amazon and Neon Bloom
Given the investment horizon of 90 days Amazon is expected to generate 6.41 times less return on investment than Neon Bloom. But when comparing it to its historical volatility, Amazon Inc is 10.72 times less risky than Neon Bloom. It trades about 0.11 of its potential returns per unit of risk. Neon Bloom is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Neon Bloom on September 12, 2024 and sell it today you would lose (10.42) from holding Neon Bloom or give up 80.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Neon Bloom
Performance |
| Timeline |
| Amazon Inc |
| Neon Bloom |
Amazon and Neon Bloom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Neon Bloom
The main advantage of trading using opposite Amazon and Neon Bloom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Neon Bloom 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 Neon Bloom will offset losses from the drop in Neon Bloom's long position.The idea behind Amazon Inc and Neon Bloom 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.| Neon Bloom vs. Inhibikase Therapeutics | Neon Bloom vs. Tempest Therapeutics | Neon Bloom vs. Core One Labs | Neon Bloom vs. Genelux Common |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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