Correlation Between Amazon and Thunderstruck Resources
Can any of the company-specific risk be diversified away by investing in both Amazon and Thunderstruck Resources 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 Thunderstruck Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Thunderstruck Resources, you can compare the effects of market volatilities on Amazon and Thunderstruck Resources 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 Thunderstruck Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Thunderstruck Resources.
Diversification Opportunities for Amazon and Thunderstruck Resources
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and Thunderstruck is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Thunderstruck Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunderstruck 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 Thunderstruck Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunderstruck Resources has no effect on the direction of Amazon i.e., Amazon and Thunderstruck Resources go up and down completely randomly.
Pair Corralation between Amazon and Thunderstruck Resources
If you would invest 18,640 in Amazon Inc on September 1, 2024 and sell it today you would earn a total of 2,149 from holding Amazon Inc or generate 11.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Amazon Inc vs. Thunderstruck Resources
Performance |
| Timeline |
| Amazon Inc |
| Thunderstruck Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amazon and Thunderstruck Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Thunderstruck Resources
The main advantage of trading using opposite Amazon and Thunderstruck Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Thunderstruck Resources 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 Thunderstruck Resources will offset losses from the drop in Thunderstruck Resources' long position.The idea behind Amazon Inc and Thunderstruck 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.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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