Correlation Between Amazon and SCI AG
Can any of the company-specific risk be diversified away by investing in both Amazon and SCI AG 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 SCI AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and SCI AG, you can compare the effects of market volatilities on Amazon and SCI AG 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 SCI AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and SCI AG.
Diversification Opportunities for Amazon and SCI AG
Significant diversification
The 3 months correlation between Amazon and SCI is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and SCI AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCI AG 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 SCI AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCI AG has no effect on the direction of Amazon i.e., Amazon and SCI AG go up and down completely randomly.
Pair Corralation between Amazon and SCI AG
Given the investment horizon of 90 days Amazon Inc is expected to generate 0.83 times more return on investment than SCI AG. However, Amazon Inc is 1.21 times less risky than SCI AG. It trades about 0.09 of its potential returns per unit of risk. SCI AG is currently generating about 0.01 per unit of risk. If you would invest 9,249 in Amazon Inc on September 3, 2024 and sell it today you would earn a total of 11,540 from holding Amazon Inc or generate 124.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.02% |
| Values | Daily Returns |
Amazon Inc vs. SCI AG
Performance |
| Timeline |
| Amazon Inc |
| SCI AG |
Amazon and SCI AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and SCI AG
The main advantage of trading using opposite Amazon and SCI AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, SCI AG 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 SCI AG will offset losses from the drop in SCI AG's long position.The idea behind Amazon Inc and SCI AG 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.| SCI AG vs. MGIC INVESTMENT | SCI AG vs. REGAL ASIAN INVESTMENTS | SCI AG vs. SEI INVESTMENTS | SCI AG vs. Nordic Semiconductor ASA |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |