Correlation Between Amazon and SIGNA Sports
Can any of the company-specific risk be diversified away by investing in both Amazon and SIGNA Sports 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 SIGNA Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and SIGNA Sports United, you can compare the effects of market volatilities on Amazon and SIGNA Sports 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 SIGNA Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and SIGNA Sports.
Diversification Opportunities for Amazon and SIGNA Sports
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and SIGNA is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and SIGNA Sports United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIGNA Sports United 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 SIGNA Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIGNA Sports United has no effect on the direction of Amazon i.e., Amazon and SIGNA Sports go up and down completely randomly.
Pair Corralation between Amazon and SIGNA Sports
If you would invest 18,870 in Amazon Inc on September 3, 2024 and sell it today you would earn a total of 1,919 from holding Amazon Inc or generate 10.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.68% |
| Values | Daily Returns |
Amazon Inc vs. SIGNA Sports United
Performance |
| Timeline |
| Amazon Inc |
| SIGNA Sports United |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amazon and SIGNA Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and SIGNA Sports
The main advantage of trading using opposite Amazon and SIGNA Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, SIGNA Sports 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 SIGNA Sports will offset losses from the drop in SIGNA Sports' long position.The idea behind Amazon Inc and SIGNA Sports United 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.| SIGNA Sports vs. Sally Beauty Holdings | SIGNA Sports vs. National Vision Holdings | SIGNA Sports vs. MarineMax | SIGNA Sports vs. Caseys General Stores |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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