Correlation Between Amazon and Pan Global
Can any of the company-specific risk be diversified away by investing in both Amazon and Pan Global 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 Pan Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Pan Global Resources, you can compare the effects of market volatilities on Amazon and Pan Global 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 Pan Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Pan Global.
Diversification Opportunities for Amazon and Pan Global
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and Pan is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Pan Global Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Global Resources 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 Pan Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Global Resources has no effect on the direction of Amazon i.e., Amazon and Pan Global go up and down completely randomly.
Pair Corralation between Amazon and Pan Global
Given the investment horizon of 90 days Amazon Inc is expected to generate 0.3 times more return on investment than Pan Global. However, Amazon Inc is 3.3 times less risky than Pan Global. It trades about 0.08 of its potential returns per unit of risk. Pan Global Resources is currently generating about -0.02 per unit of risk. If you would invest 14,632 in Amazon Inc on August 25, 2024 and sell it today you would earn a total of 5,080 from holding Amazon Inc or generate 34.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Pan Global Resources
Performance |
| Timeline |
| Amazon Inc |
| Pan Global Resources |
Amazon and Pan Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Pan Global
The main advantage of trading using opposite Amazon and Pan Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Pan Global 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 Pan Global will offset losses from the drop in Pan Global's long position.The idea behind Amazon Inc and Pan Global Resources 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.| Pan Global vs. Legacy Education | Pan Global vs. NVIDIA | Pan Global vs. Apple Inc | Pan Global vs. Microsoft |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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