Correlation Between Amazon and VanEck Vectors
Can any of the company-specific risk be diversified away by investing in both Amazon and VanEck Vectors 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 VanEck Vectors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and VanEck Vectors ETF, you can compare the effects of market volatilities on Amazon and VanEck Vectors 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 VanEck Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and VanEck Vectors.
Diversification Opportunities for Amazon and VanEck Vectors
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and VanEck is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and VanEck Vectors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors ETF 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 VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors ETF has no effect on the direction of Amazon i.e., Amazon and VanEck Vectors go up and down completely randomly.
Pair Corralation between Amazon and VanEck Vectors
Given the investment horizon of 90 days Amazon Inc is expected to generate 1.28 times more return on investment than VanEck Vectors. However, Amazon is 1.28 times more volatile than VanEck Vectors ETF. It trades about 0.08 of its potential returns per unit of risk. VanEck Vectors ETF is currently generating about 0.05 per unit of risk. If you would invest 12,657 in Amazon Inc on September 4, 2024 and sell it today you would earn a total of 8,414 from holding Amazon Inc or generate 66.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. VanEck Vectors ETF
Performance |
| Timeline |
| Amazon Inc |
| VanEck Vectors ETF |
Amazon and VanEck Vectors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and VanEck Vectors
The main advantage of trading using opposite Amazon and VanEck Vectors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, VanEck Vectors 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 VanEck Vectors will offset losses from the drop in VanEck Vectors' long position.The idea behind Amazon Inc and VanEck Vectors ETF 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.| VanEck Vectors vs. Vanguard Index Funds | VanEck Vectors vs. Vanguard Index Funds | VanEck Vectors vs. Vanguard STAR Funds | VanEck Vectors vs. SPDR SP 500 |
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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