Correlation Between Amazon and Twelve Seas
Can any of the company-specific risk be diversified away by investing in both Amazon and Twelve Seas 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 Twelve Seas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Twelve Seas Investment, you can compare the effects of market volatilities on Amazon and Twelve Seas 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 Twelve Seas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Twelve Seas.
Diversification Opportunities for Amazon and Twelve Seas
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Amazon and Twelve is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Twelve Seas Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twelve Seas Investment 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 Twelve Seas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twelve Seas Investment has no effect on the direction of Amazon i.e., Amazon and Twelve Seas go up and down completely randomly.
Pair Corralation between Amazon and Twelve Seas
If you would invest 19,578 in Amazon Inc on September 3, 2024 and sell it today you would earn a total of 1,211 from holding Amazon Inc or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 5.0% |
| Values | Daily Returns |
Amazon Inc vs. Twelve Seas Investment
Performance |
| Timeline |
| Amazon Inc |
| Twelve Seas Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amazon and Twelve Seas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Twelve Seas
The main advantage of trading using opposite Amazon and Twelve Seas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Twelve Seas 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 Twelve Seas will offset losses from the drop in Twelve Seas' long position.The idea behind Amazon Inc and Twelve Seas Investment 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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